Manual Title : Quality Management Manual MANUAL NUMBER:

KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

3. QUALITY MANAGEMENT SYSTEM

3.1 Management Overview

Company Profile

KSDR a subsidiary of KS Energy based in Singapore listed on the SGX-SESDAQ and is a services
group catering to the oil and gas and petrochemical industries around the world.

KSDR is establishing itself in the worldwide market as owner of offshore mobile assets. It provides both
onshore and offshore drilling and accommodation services to major and independent oil companies
engaged in hydrocarbon search, exploration, and production activities. The Company will use dedicated
asset management companies to provide operational manpower, services, and project management for
company-owned or -operated rigs deployed worldwide.

KSDR is committed to the provision, management and crewing of land & marine accommodation and
drill rigs.

We are committed to providing operations and services of a standard to suit our customers’
requirements. Quality, safety, and environmental objectives are therefore of paramount importance in
achieving our goals.

The operational headquarters of KS Drilling Pte Ltd are located in Dubai (United Arab Emirates)

Scope of Quality Management System

The scope of the Quality Management System defined by these documents applies to all KSDR
locations and operations worldwide.

This system of documents should be used in conjunction with the clients and or third party bridging
documents.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

Quality Management System

KSDR-01
Quality Management Manual
Policies & Procedures

KSDR-02 KSDR-03 KSDR-04 KSDR-05 KSDR-06 KSDR-10

Safety & Environmental Operations & Maintenance Human Resources Emergency Response Finance Information
Management System System System System System Technology

KSDR-02-01 KSDR-03-01 KSDR-04-01 KSDR-05-01

Safety & Environmental Marine Operations Human Resources Corporate Crisis
System Manual Manual Manual Management Plan

KSDR-03-02 KSDR-04-02 KSDR-05-02

KSDR-02-02
Land & Well Services Training Management Emergency Response
Personnel Safety Manual
Operations Manual Manual Onshore Manual

KSDR-02-03 KSDR-03-03 KSDR-05-03

Medical Procedures Offshore Rig Operations Emergency Response
Manual Manual Offshore Manual

KSDR-05-04
KSDR-02-04 KSDR-03-04
Shipboard Oil Pollution
Permit to Work Manual Well Control Manual
Emergency Plan (SOPEP)

KSDR-03-05
KSDR-02-05
Maintenance
COSHH Manual
Management System

KSDR-03-06
Land Rigs Manual

KSDR-03-07
Safety Case Manual

Figure 1 Quality Management System

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
01-Mar-08
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 01

3.2 KSDR Quality System

KSDR’s Quality Management System is based on the philosophy that quality must be integral part of our
day-day activities. Inspections and audits provide only a measure of the quality standard achieved.
Therefore, the Quality Management System is supported by documented policies and interrelated
procedures established for activities that significantly influence the quality of service, product, safety, or
business operations. This system also recognizes policies and procedures that support the
organization’s core business processes that are vital to achieving organizational and operational
excellence. The Quality Management System provides the following:

• Standardized procedures and processes for consistent results and quality performance

• Control, improvement, and maintenance of KSDR business processes and operations

• Coordination and control of the improvements to the business systems

• Guidance for performance measurement, assessment, and improvement

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
01-Mar-08
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 01

3.3 Management Philosophy

Quality Concept

KSDR defines quality as the ability to consistently meet or exceed the commitments made to our
customers. We strive to exceed our customers’ expectations, resulting in high levels of customer
satisfaction and business success. Quality requires that each KSDR employee constantly strives for
process improvement and delivers the value that those processes provide our customers, whether
internal or external to the organization. This focus on the customer and continuous improvement is
supported by each employee’s adherence to specifications, policies, procedures, and achievement of
performance standards. This combination of customer focus, forward-looking improvement, and the
discipline of standardized processes provides the foundation for consistent KSDR quality and ongoing
performance excellence.

Quality Objectives

Commercial viability and the safety of personnel demand a disciplined approach. KSDR’s objective is to
make its name synonymous with customer satisfaction. The effectiveness of these quality standards will
be measured by continuing customer satisfaction and will reflect a high degree of safety and reliability in
equipment and competency of personnel. The cost of meeting that level of quality is controlled by an
effective Quality Management System that provides the necessary standardization to allow sufficient
flexibility for adjustments to meet scheduled targets through managed and disciplined decision-making
without compromising the appropriate quality or safety standards.

Reporting to Management

Organizational excellence can only be achieved through continuous and objective evaluation of
performance in meeting internal near- and long-term strategic goals, responding to marketplace needs,
and maintaining comparative and competitive performance levels. This performance measurement
process, along with routine feedback from KSDR’s scheduled internal and external audits, the
corrective action reporting system, customer satisfaction evaluations, and other quality management
sources, provides clear guidance toward continuous ongoing improvement and achievement of
customer satisfaction and KSDR business objectives.

Client Relations

KSDR wants to have a good relationship with clients and regards the success of that relationship as a
decisive factor in achieving quality service that benefits both parties.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

3.4 Quality Documentation System Structure

Structure and Use

This system of documentation contains relevant policies, procedures, information, and requirements
and is the source of information to be used by KSDR employees to perform their assignments and
responsibilities. The structure of the documents that describe KSDR’s Quality Management System is
detailed below. The manuals are reviewed and updated as significant changes occur within KSDR, the
Quality Management System, or any relevant legislation.

The KSDR-01 manual defines the corporate systems, policy and procedures. Both Drilling rigs and
Accommodation rigs will use the manuals which appertain to there function.

The Quality Management System is classified into a documentation manual according to five core
business functions. This system is outlined below.

Quality Management Manual (KSDR-01)

This manual describes the way the organization conducts its business with the Quality Management
System policy and procedures. The manual contains the following:

• Descriptions of key elements of the Quality Management System

• KSDR corporate policy statements

• Organizational responsibilities and reporting relationships

• Quality management and system procedures

• Corporate forms related to corporate use and quality system management

Safety and Environmental Management System (KSDR-02)

This system describes in detail KSDR’s Safety and Environmental Management System, philosophy,
underlying principles, and policies and procedures related to health, safety, and environmental issues. It
ensures that hazards are identified and risks are continuously and systematically assessed and are
either eliminated or managed via control measures. The Safety and Environmental Management
System comprises several manuals and elements, including the following:

• Safety and Environmental System Manual (KSDR-02-01)

• Personnel Safety Manual (KSDR-02-02)

• Medical Procedures (KSDR-02-03)

• Permit to Work Manual (KSDR-02-04)

• COSHH Manual (KSDR-02-05)

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

Operations and Maintenance System (KSDR-03)

The Operations and Maintenance System manuals contain the policies and procedures relating to
general operations and maintenance issues and give specific instructions for conducting operations on
KSDR facilities. These instructions may be corporate guidelines or rig-specific in nature and are
addressed in the following:

• Marine Operations Manual (KSDR-03-01)

• Land and Well Services Operations Manual (KSDR-03-02)

• Offshore Rig Operations Manual (KSDR-03-03)

• Well Control Manual (KSDR-03-04)

• Maintenance Management System Manual (KSDR-03-05)

• Land Rigs Manual (KSDR-03-06)

• Safety Case Development Manual (KSDR-03-07)

Human Resources System (KSDR-04)

The manuals that comprise this area contain all policies and procedures relating to human resources
administration and training management. The manuals are:

• Human Resources Manual (KSDR-04-01)

• Training Management Manual (KSDR-04-02)

These manuals detail the following information:

• Standards of competence

• Training requirements

• Other human resource activities

Emergency Response System (KSDR-05)

The manuals that comprise this area provide policies and procedures for emergency-related issues and
assign requirements, responsibilities, and roles for appropriate emergency response. The manuals are:

• Corporate Crisis Management Plan (KSDR-05-01)

• Emergency Response Manual – Onshore (KSDR-05-02)

• Emergency Response Manual – Offshore (KSDR-05-03)

• Shipboard Oil Pollution Emergency Plan (SOPEP) (KSDR-05-04)

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

These manuals detail the following information:

• Corporate crisis management functions

• Contact details of emergency services and compliance authorities

• Rig-specific emergency response procedures

• Activation/notification procedures/activities

• Oil pollution emergency plans (both general and rig-specific)

• Other emergency planning, preparation, and exercising activities

Finance System (KSDR-06)

These manuals detail the following information:

• Finance Manual

• AFE Manual

Information Technology (KSDR-10)

• IT Email and Internet Access Policy

• IT Security Policy and Guidelines

• IT Equipment Lifecycle and Disposal Policy

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

Quality System Documentation Levels

Each documentation manual contains elements of the Quality Management System corresponding to a
particular business function area. These manuals may contain both corporate-level and rig-specific
documents as described below. All procedures are documented and expand on KSDR policy and
philosophy stated in the Quality Management Manual and supportive documents.

Level 1 and 2 Corporate-Level Documents:

These are corporate documents that describe overall policy, set out the key elements of the
management system, and describe senior management roles, responsibilities, and commitments. In
addition, they describe all the KSDR procedures, policies, principles, and guidance documentation.
These manuals are controlled and issued via the office in Dubai (United Arab Emirates).

Level 3 Rig-Specific Documents:

These documents are rig-specific manuals and detail information on rig equipment, rig systems, their
operating criteria and limitations, rig operations, well control, specific rig procedures, and drilling
operations.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

Procedures

The manuals provide documentation for quality procedures and identify the area for their application.
KSDR maintains documentation revision control to reflect all changes to the existing Quality
Management System, ensuring that KSDR’s quality objectives are current and will continue to apply.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

3.5 Management Responsibility

Resources

The President and Chief Executive Officer (CEO) will ensure that KSDR’s management structure and
other resource requirements, including verification activities, support the full scope of its business
activities and that personnel are assigned based on operational requirements and competency.

His role in verification activities includes but is not limited to inspecting, auditing, and monitoring
operations and support activities. Personnel independent of those having direct responsibility for the
work being performed will conduct audits of the Quality, Health, Safety and Environmental Management
Systems.

KSDR will directly hire and appoint directors associated with it’s core activity of asset management.
KSDR will sub-contract the actual day-day management of it’s assets to asset management companies.
Such asset management companies will be obliged to abide with KSDR’s quality objectives and
procedures. For the purpose of the QHSE system, we consider the same as one company

Responsibilities

The Chief Executive Officer has the overall responsibility to make the required resources available for
the safe, responsible and cost effective functioning of the company with a particular emphasis on quality
assurance activities including the maintenance of KSDR policies. The CEO is responsible for KSDR’s
Quality Management System and chairs regular steering committee review meetings of the documented
Quality Management System to ensure that it remains adequate for and appropriate to the business
objectives.

The Chief Operations Officer is responsible for all aspects of rig operations, logistics, and accounting
during operations of service contracts. The COO is also responsible for monitoring well operations,
procedures and practices, interfaces and programs facilitating timely well completion. In addition, the
COO responds to requests and actions required by customers and works in accordance with KSDR
quality procedures, safety procedures, and policies.

The Chief Financial Officer is responsible for all accounting and financial controls within the operation
for monitoring and reporting to the CEO. The CFO also ensures that safety and quality are not
compromised through financial restrictions.

The Human Resources Department is responsible for human resources for both the onshore and
offshore facilities and ensures that all personnel within that direct responsibility comply with the policies
and procedures of KSDR’s Quality Management System. The Human Resources Department also
ensures that all employees are adequately inducted into KSDR’s Safety and Environmental
Management System.

The Vice President Marketing and Business Development is responsible for marketing the units
worldwide. In addition, the Vice President is responsible for seeking out and responding to invitations to
tender from oil operating and exploration companies. Price setting, contracts, negotiations, and
corporate hospitality are also the Vice President’s responsibility. All work undertaken within the
Contracts and Marketing Department is overseen to ensure compliance with KSDR quality procedures
and safety management aspects.

The QHSE Manager oversees the QHSE services group. This group has the authority to define,
maintain, coordinate, and monitor the QHSE Management System and see that prompt and effective

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

action is taken to ensure the requirements of the published Quality, Health, Safety and Environmental
Management Systems are met. The QHSE Manager advises management of non conformances within
the system and monitors corrective actions.

The Technical Support Manager is responsible for the materials function in the supply, storage, and
repair of materials and the provision of related services to KSDR facilities in compliance with
procedures and legislation affecting operations, quality, health, and safety.

The Rig/Operations Manager is responsible for ensuring that all procedures contained in the
published Management Systems are implemented and complied with on the installations/sites.

The Person In Charge is responsible for ensuring that all procedures contained in KSDR’s published
Management Systems are implemented and complied with.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
13-Oct-11
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 02

Communication

All Safety Alerts, Technical bulletins, Regulative body information, Clients safety Alerts and any other
relevant information will be passed from the Corporate Office to the other business units, their local
offices and the rigs. This information will then be disseminated at the site safety meetings. Similarly
information from either the rigs or local offices will be passed back to Business unit offices and
corporate offices by means of Safety Meeting Minutes (KSDR-02-01-113-F001).

On regular intervals a conference call between the rig, local Office and the business unit QHSE and
Operations Managers is initiated.
Onshore offices will record their Operations meeting minutes for passing either up or down the
organization. This ensures that all relevant information is disseminated and recorded. The Corporate
QHSE Manager is responsible for ensuring this flow of information takes place.

Law, Rules & Regulations

Requirements on laws, rules & regulations will be forwarded from the Corporate Office to the business
units.
The corporate office will be updated on changes in laws, rules & regulations by means of a membership
of IADC and a future membership of the IMO.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
01-Mar-08
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 01

3.6 KSDR Continuous Improvement Process

KSDR seeks continuous improvement in all aspects of our business to achieve ongoing safety,
customer satisfaction, and organizational results. We use a systematic approach and process for
continuous improvement to achieve these goals. The continuous improvement process is founded on
the idea that all activities associated with operation of the organization are based on processes that can
be clearly defined and analyzed. The major steps for ensuring a continuous improvement process
follow.

Improvement Opportunity Identification:

Collect and evaluate information from various sources such as:

• Strategic and operational results from internal performance evaluations

• Internal and external assessments or audits

• Organizational incidents or difficulties

• Changing regulations

• Customer needs or wants

Identify and assign priority to potential improvement opportunities based on expected benefits in
economic payback, safety improvement, or other improvement criteria.

Project Teams: Teams are the primary groups who use the improvement methodology. Project teams
are commissioned based on the skills that team members have to analyze and develop potential
solutions and also ensure adequate stakeholder representation.

Evaluate the Problem and Define Solutions: The team performs a systematic cycle of problem and
root cause analysis to identify the most likely source of the problem that is limiting process
performance. The team considers various options for improvement. From this, the team develops a
plan for concrete changes to the process to improve it. The team then tests the potential process
enhancements and validates the strength of the improvement.

Benefit Validation: Analysis of the results from the initial implementation ensures that the improvement
levels meet company needs and are appropriate for the level of investment.

Institutionalize the Change: Once the process improvement is perfected, it is formally integrated into
the KSDR organization through documentation and training. In this way, the changes to a process are
fully captured, documented, and integrated into standard work practice.

Commendation: Once the improvement benefits have been realized and integrated into standard work
practice, it’s important to recognize the team or individuals responsible for the improvements.
Celebrating the achievement sets the stage for future improvement activities.

This structured process effectively and efficiently improves business processes of all types throughout
the organization. KSDR benefits from this improvement process and it is reinforced directly and
indirectly through KSDR training programs. KSDR employees should use this formal improvement
process as a foundation for ongoing improvement activities.

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Manual Title : Quality Management Manual MANUAL NUMBER:
KSDR-01
Manual No. : KSDR-01
ISSUE DATE:
01-Nov-04
REV. DATE:
01-Mar-08
SERIES No: APPROVED BY: REV. No.:
Level 1 QHSE CEO 01

3.7 References
Quality Management Manual KSDR-01
Safety and Environmental System Manual KSDR-02-01
Personnel Safety Manual KSDR-02-02
Medical Procedures Manual KSDR-02-03
Permit to Work Manual KSDR-02-04
COSHH Manual KSDR-02-05

Marine Operations Manual KSDR-03-01

Land and Well Services Operations Manual KSDR-03-02
Offshore Rig Operations Manual KSDR-03-03
Well Control Manual KSDR-03-04
Maintenance Management System Manual KSDR-03-05
Land Rigs Manual KSDR-03-06
Safety Case Manual KSDR-03-07

Human Resources Manual KSDR-04-01

Training Management Manual KSDR-04-02

Corporate Crisis Management Plan KSDR-05-01

Emergency Response Manual – Onshore KSDR-05-02
Emergency Response Manual – Offshore KSDR-05-03
Shipboard Oil Pollution Emergency Plan (SOPEP) Manual KSDR-05-04

Finance System Manual KSDR-06

AFE Manual

IT Email and Internet Access Policy KSDR-10

IT Security Policy and Guidelines
IT Equipment Lifecycle and Disposal Policy

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