SUCCESSFUL CULTURE DEVELOPMENT & INTEGRATION IN AN ACTIVE M&A ENVIRONMENT

Moderator: Brett Haugh Principal & Executive VP, Ascende

Marty Kunz VP Human Resources, C&J Energy

Roger Mosby VP Human Resources, Kinder Morgan

Laura Ramey VP Human Resources, Crestwood Midstream

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TALENT MANAGEMENT, DEVELOPMENT & ACQUISITION STRATEGIES IN ENERGY SUMMIT

GENERAL SESSION

C&J Energy Services Presenter: Marty J. Kunz, SPHR

Vice President-Human Resources Workforce Next Summit

Omni Hotel- Houston Westside September 30, 2014

C&J Overview

C&J Energy Services is an independent provider of premium hydraulic fracturing, coiled tubing, wireline and other

complementary services with a focus on complex, technically-demanding well completions. We provide our services in

conjunction with both conventional and unconventional well completions, as well as workover and stimulation operations

for existing wells.

1997

1999

2002

2007

2011

2012

2013

2014

Josh Comstock Founded C&J in Robstown, TX

Introduced Stand Alone Pumping

Services

Introduced Coiled Tubing Services Robstown, TX

Introduced Fracturing Services:

Robstown, TX

Initial Public Offering on NYSE;

Acquired Total Equipment Services;

Corporate Office moved to Houston

Introduced Wireline With Acquisition of

Casedhole Solutions

Opening of new Corporate office and

New R&T Center; Acquired Tiger

Casedhole; Acquisition of Nabors NCPS

Acquired Tellus

$244.2

$758.5

$1,111.5 $1,070.3

2010 2011 2012 2013

Revenue ($MM)

Financial Growth - Revenues

Areas of Operation

We are geographically focused where there is the most opportunity, with service centers near the majority of prominent domestic shale basins.

Research and Technology

• Downhole Tools Perforating Coiled Tubing

• Wireline Tools

Grand Opening Spring 2014 of new 95,000 sq. ft. Engineering & Manufacturing Facility

• Surface Equipment Fracturing Coiled Tubing Wireline Pressure Pumping

• Fracturing Chemistry

The C&J Family

Our top-tier manufacturer of hydraulic fracturing, coiled tubing, pressure pumping and other equipment used in the energy services industry.

Our global supplier of oilfield chemicals and technology. They supply, engineer, manufacture and apply specialty chemicals.

Tellus delivers innovative Directional Drilling, MWD and LWD products and technologies to the oil and gas industry through contract engineering and in-house developments.

Oil & Gas Awards

2012 Gulf Coast Oil & Gas Awards, Winner Drilling & Well Services Company of the Year 2013 MidCon Oil & Gas Awards, Winner Well Completion Company of the Year 2013 Gulf Coast Oil & Gas Awards, Winner The Preferred Technology Award for Excellence in Well Completion

M&A Activity at C&J • 2011- C&J acquires Total Equipment

• 2012- C&J acquires Casedhole Solutions

• 2013- C&J acquires Tellus Oilfield

• 2014- C&J acquires Tiger Casedhole

• 2014- C&J and Nabors Drilling announce C&J’s acquisition of Nabors Completion and Production Services

Total Equipment Acquisition • Was a main supplier of Coiled Tubing and Fracturing equipment for C&J

• Vertical integration of supply chain

• Approximately 150 employees

• Stand alone operation

Casedhole Solutions Acquisition • Added a new line of business

• Strong management team

• Approximately 600 employees

• Strong company culture

• “Slow burn” on integrating

• Systems • Policies • Procedures • Pay practices • Payroll

• Just “completed” in 2014

Tellus Acquisition • Very small company (less than 20 employees)

• Intellectual capital added to newly established Research & Technology group

• Tellus needed capital to implement products and ideas

• Integration effort minimal

• Owner(s) stayed with C&J

Tiger Casedhole Acquisition • Tiger also small, but STRONG culture

• Approximately 37 employees

• Owner is now manager of that division

• Strong resistance to becoming part of a “big company”

• Unlike Tellus, Tiger had a “history” and long-tenured employees

• Much softer integration approach • Lots of hand holding and reassurance • Slower burn on changes

• The magical world of “California”

Nabors and C&J • Scheduled to close in Q4-2014 or early 2015 (Fast track)

• Smaller company acquires larger one

• (3,100 employees versus 7,000- 8,000 employees)

• Complicated • Inverse acquisition

• “Mother ship” remains

• Cultures are very different

• NCPS is not their “core” business

• Must remain competitors until close

• Systems (IT, HR, Accounting) work is intense

Thank You

Visit www.cjenergy.com to learn more about what we can accomplish for you

Roger Mosby VP – HR

Kinder Morgan, Inc.

HR’s role in M&A (and Talent Management) The use of a Cultural Assessment Staffing and the Preliminary Integration Plan Available Talent and Pre-Close Activities Post-Close Integration

HR’s role in any merger or acquisition is to partner with Business Development to evaluate the human capital part of the business deal: The associated dollar costs Cultural issues Identified risks Integration issues The talent and talent gaps Defensive Talent Management The 90 Day Pre-Close Plan Integration Post-Close

Team lead – Usually an experienced generalist Benefits Compensation Talent Management HRIS Payroll Employment attorney External consultants, which could include: ◦ Older worker analysis (generally a law firm) ◦ ERISA benefit plans specialists ◦ Organized Labor specialist ◦ Outplacement

Work with HR Team Lead to apply cultural assessments & recommend integration strategies

Identify Key Talent in the acquired company Defensive Talent Management Manage the Available Talent List Manage Outplacement: ◦ Manage Outplacement Vendor ◦ Internal and external job fairs ◦ Manage Transitional talent and other temporary talent

needs Manage the severance process Onboarding

A Cultural Similarities Assessment is useful in determining the “fit” between the companies and the direction of integration plans. Areas of assessment might include: ◦ Compensation ◦ Performance Management ◦ Benefits ◦ Company Perks ◦ Communications ◦ Work-Life Balance ◦ Ethics & Rules of Conduct ◦ Organizational Structure

It is never too early to work on Integration!

Routinely look at positions and people in both companies for the best to move the new organization forward

Identify Key Talent in both companies and make an expression of interest

Utilize Key Talent to develop the post close organization and which employees will fill RFT positions in the go-forward organization

Select Transitional Employees Identify employees to receive severance Develop Available Talent List (Transitional and

Severed employees) Develop the OWBPA list

The Available Talent List consists of those employees that will be terminated at close or at the end of their transitional assignment. If a large layoff is anticipated, consider allowing

employees to self select layoff Once the AT list is developed, communicate in

order to place internally Use the AT list for internal and external job fairs For those that are not placed, the Available

Talent List becomes the working outplacement list

Talent Management supports the process that determines the number and business reasons to keep surplus employees beyond the close and attempt to place within the Company

Develop incentive packages for Transitional Employees that cannot be placed: ◦ Preserve any severance rights ◦ Completion Bonuses ◦ Determine now the conditions under which a

Transitional Employee could have early release ◦ Use the offer letter process to document the Transitional

offer and the employee’s acceptance of the conditions

Outplacement – Will you use Internal or External resources, or a combination? ◦ If external, one vendor or two? ◦ All together or separate executive from others?

Continue to manage Transitional Talent ◦ Transitional Talent may be needed to wind down a

project but should be evaluated for future placement until they are actually severed

Phased Exits – If the companies agree, phased Exits (terminations) before close prevents masses of people walking out at the same time

Start the Severance Process

Close out the severance process Continue outplacement Manage the Available Talent List with the

remaining Transitional Employees Utilize the On-Boarding process for integrating

those being merged into the dominant culture Reinforce good management practices via

training: ◦ CBTs ◦ Short training sessions that overview a manager’s role in

performance management, payroll/timekeeping, etc.

Connections for America’s Energy ™ ™ ™ ™ ™ ™

Connections for America’s Energy ™

™ ™

™ Connections for America’s Energy ™

™ Connections for America’s Energy

Laura Ramey Vice President, Human Resources

Crestwood Equity Partners LP Crestwood Midstream Partners LP

“Human Resource Leadership for Mergers & Acquisitions”

Connections for America’s Energy ™ ™ ™ ™ ™ ™

Agenda

30

• Introduction

• Pre-M&A and During M&A Activities

• Post-M&A Activities

• Questions & Answers

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• General

• Bottlenecks

• Processing and Onboarding

• Preparation / Supplies

• Follow Up

Pre-M&A and During M&A Activities

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Post-M&A Activities

• Communicate, communicate, communicate • Key employees, retention, redundancies

• Compensation • Roles, responsibilities, expectations; leadership team; and,

new reporting relationships • Expectations, policies, procedures, standards and required

training • Plan an employee appreciation event (first 90 days)

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Laura Ramey Vice President, Human Resources

Crestwood Equity Partners LP Crestwood Midstream Partners LP

laura.ramey@crestwoodlp.com 832.519.2268

Thank You

THANK YOU

B e t he f i r s t t o hea r abou t upc om ing #W F NL I V E ev en t s ! S i gn up : h t t p : / / eepu r l . c om / W D2O H

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