Koil Energy Solutions Inc. (KLNG)

[1918forever]

MMS & DPDW

On April 17, Deep Down announced a definitive agreement to purchase all of the outstanding capital stock of Flotation Technologies, Inc. Flotation recently introduced its patent pending CoreTec(TM) drilling riser buoyancy modules, which Deep Down believes can become the industry standard for ultra deepwater applications. Subject to completion of this acquisition, it is expected that the drilling riser flotation systems to be provided under the Delba letter of intent will be manufactured by Flotation Technologies in Biddeford, Maine. Deep Down will handle installation of the drilling riser buoyancy.

UNITED STATES DEPARTMENT OF THE INTERIOR MINERALS MANAGEMENT SERVICE GULF OF MEXICO OCS REGION:

http://www.gomr.mms.gov/homepg/regulate/regs/ntls/2007NTLs/07-g14.pdf

Under 30 CFR 250.910(b)(1)(i) and (2)(i), pipeline risers connected to floating platforms are subject to the platform verification program as associated structures. The Minerals Management Service (MMS) Gulf of Mexico OCS Region (GOMR) has determined that new pipeline risers are subject to a separate verification process that necessitates the use of an independent Certified Verification Agent (CVA) specifically for the pipeline riser. These pipeline risers are a critical
component of any floating platform proposal and must meet stringent requirements for design, fabrication, and installation. Accordingly, the MMS GOMR has developed the following guidelines for the pipeline riser verification process as part of the platform verification program.

Verification Requirements
1. Pursuant to 30 CFR 250.916(b)(2)(i), a proposed pipeline riser for a floating facility must
undergo design verification.
2. Pursuant to 30 CFR 250.917(b)(2)(i), a proposed pipeline riser for a floating facility must
undergo fabrication verification for the initial fabrication of a riser. However, fabrication
verification is not required if
a. The proposed riser is identical in design to an existing riser on the same facility;
b. The fabrication verification plan for the existing riser has been approved by the MMS
GOMR;
c. The proposed riser will be designed, fabricated, and installed by the same lessee,
lease operator, or pipeline right-of-way (ROW) holder as the existing riser; and
d. The outside diameter of the proposed riser is 8 ⅝ inches or less.
3. Pursuant to 30 CFR 250.918(b)(3)(ii), a proposed pipeline riser for a floating facility
must undergo installation verification for the initial installation of a riser. However, installation
verification is not required if
2
a. The proposed riser is identical in design to an existing riser on the same facility;
b. The installation verification plan for the existing riser has approved by the MMS
GOMR;
c. The proposed riser will be designed, fabricated, and installed by the same lessee,
lease operator, or pipeline ROW holder as the existing riser; and
d. The outside diameter of the proposed riser is 8 ⅝ inches or less.