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June 6, 2016 6:08 AM EDT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM SD

 

SPECIALIZED DISCLOSURE REPORT

 

Oil States International, Inc.
(Exact name of registrant as specified in its charter)

 

 

     

Delaware

1-16337

76-0476605

(State or Other Jurisdiction
of Incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

     
     

Three Allen Center

333 Clay Street, Suite 4620, Houston, Texas

77002

(Address of Principal Executive Offices)

(Zip Code)

   

Sarah A. Munson

(713) 652-0527

(Name and telephone number, including area code, of the

person to contact in connection with this report.)

 

 

 

Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:

 

_√__

Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2015.

 

 
 
 

 

Section 1 – Conflict Minerals Disclosure

 

Item 1.01 Conflict Minerals Disclosure and Report

 

1.

Introduction

 

Oil States International, Inc. (the Company or Oil States), through its subsidiaries, manufactures and contracts to manufacture products that contain gold, tantalum, tin and tungsten (“3TG”). As these materials are necessary to Oil States’ products, the Company is dedicated to tracing the origin of these metals to ensure compliance with the requirements set forth in the final rule regarding use of conflict minerals.

 

2.

Conflict Minerals Disclosures

 

Oil States has concluded in good faith that during the reporting period for 2015:

 

 

a)

Oil States manufactured and contracted to manufacture products for which “conflict minerals” (as defined in Section 1502(e)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection Act) are necessary to the functionality or production.

 

b)

As such, Oil States performed a good faith “reasonable country of origin inquiry” (RCOI) and subsequent due diligence in an effort to determine whether its sourcing practices directly or indirectly funded armed groups in the Covered Countries.

 

In accord with Rule 13p-1 under the Securities Exchange Act of 1934 (“Rule 13p-1”), Oil States has filed this Specialized Disclosure Form (“Form SD”) and the associated Conflict Minerals Report which further details the results of our good faith RCOI, as well as our additional due diligence regarding the sources of potential conflict minerals in our supply chain. Both reports are posted to a publicly available Internet site at http://www.ir.oilstatesintl.com/sec.cfm.

 

Item 1.02 Exhibits

 

Oil States filed, as an exhibit to this Form SD, the required Conflict Minerals Report.

 

Section 2 – Exhibits

 

Item 2.01 Exhibits

 

Exhibit 1.01 – Conflict Minerals Report.

 

 
 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.

 

 

 

Oil States International, Inc.

 

 

 

 

 

 

 

/s/ Sarah A. Munson

 

 

 

Name: Sarah A. Munson

 

 

 

Title: Vice President, Controller and Chief Accounting Officer

 

       
DATED: June 6, 2016      

 

Exhibit 1.01 – Conflict Minerals Report

 

Conflict Minerals Report of Oil States International, Inc.

In accord with Rule 13p-1 under the Securities Exchange Act of 1934

 

This is the Conflict Mineral Report of Oil States International, Inc. (the Company or Oil States) for calendar year 2015 (excepting conflict minerals that, prior to January 31, 2013, were located outside of the supply chain) in accord with Rule 13p-1 under the Securities Exchange Act of 1934 (“Rule 13p-1”).

 

1.

Introduction

 

The intent of this Conflict Minerals Report (CMR) is to summarize the results of Oil States good faith Reasonable Country of Origin Inquiry (“RCOI”) and describe Oil States due diligence process in accordance with Rule 13p-1 requirements.

 

2.

Reasonable Country or Origin Inquiry Description

 

To implement the RCOI, Oil States’ Tier 1 suppliers were engaged to collect information regarding the presence and sourcing of gold, tantalum, tin and tungsten (“3TG”) used in the products supplied to Oil States. Information was collected and stored using an online platform provided by a third party vendor, Source Intelligence.

 

Our supplier engagement efforts followed these steps:

 

 

●

An introduction email was sent to Tier 1 suppliers describing the Conflict Minerals Compliance Program (“CMCP”) requirements. In an effort to increase awareness of the CMCP and supporting regulation concerning 3TG mineral tracing, Oil States’ suppliers were introduced to the Source Intelligence Conflict Minerals Supplier Resource Center.

     
 

●

Following the introduction email, a subsequent email was sent to suppliers containing instructions for submitting their Conflict Minerals Reporting Template (“CMRT”), either in MS Excel format or by completing directly in an online data collection platform.

     
 

●

Following the initial introductions to the program and information request, up to four reminder emails were sent to each non-responsive supplier requesting survey completion.

 

 

●

Suppliers who remained non-responsive to these email reminders were contacted by telephone and offered assistance. This assistance included, but was not limited to, further information about the CMCP, an explanation of why the information was being collected, a review of how the information would be used and clarification regarding how the information needed could be provided.

 

 

●

If, after these efforts, a given supplier still did not register with the system or provide the information requested, an escalation process was initiated. The escalation process consisted of direct outreach by Oil States to request their participation in the program.

 

Oil States utilized the Electronic Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI) Conflict Minerals Due Diligence Template (“EICC-GeSI Template”) for data collection.

 

Suppliers were asked to provide information regarding the sourcing of their materials with the ultimate goal of identifying the 3TG smelters or refiners (“SORs”) and associated mine countries of origin. To facilitate reporting at the product-level, the products indicated by Oil States as being sourced from a given supplier were communicated to that supplier as part of the data request. Suppliers were able to submit multiple CMRTs as needed to address all indicated products. In many cases, however, the supplier response defaulted to a company level CMRT. 

 

 
 
 

 

Where a supplier was unable to provide a CMRT, Source Intelligence requested information on its suppliers of products or components which may require 3TG for their production or functionality.  These Tier 2 suppliers, and subsequent tiers of suppliers as needed, were then engaged following the contact procedures explained above.  When contact information was provided, Tier 2 and beyond suppliers were contacted up to three times via email or phone in order to build a chain-of-custody back to the 3TG SOR.

 

Supplier responses were evaluated for plausibility, consistency, and gaps both in terms of which products were stated to contain or not contain necessary 3TG, as well as the origin of those materials. Additional supplier contacts were conducted to attempt to resolve the following quality control flags:

 

 

●

One or more SORs were listed for an unused metal;

     

 

 

●

SOR information was not provided for a used metal, or SOR information provided was not a verified metal processor;

     

 

 

●

Supplier answered yes to sourcing from a Covered Country, but none of the SORs listed are known to source from the region;

     

 

 

●

Supplier indicated that they have not received conflict minerals data for each metal from all relevant suppliers;

     

 

 

●

Supplier indicated they have not identified all of the SORs used for the products included in the declaration scope;

     

 

 

●

Supplier indicated they have not provided all applicable SOR information received; and

     

 

 

●

Supplier indicated 100% of the 3TG for products covered by the declaration originate from scrap/recycled sources, but one or more SORs listed are not known to be exclusive recyclers.

 

 

 

3.

RCOI Results

 

A total of 253 Tier 1 suppliers were identified as in-scope for conflict mineral regulatory purposes and contacted as part of the RCOI process.

 

As a result of the inquiry process, Oil States was able to identify 30 SORs of 3TGs with an indication of DRC (Democratic Republic of the Congo) or CC (“Covered Country”) sourcing. Refer to section 4 below for a summary of these SORs.

 

 
 
 

 

4.

SOR Facility Description

 

Below is a summary of product-level only SORs with indications of DRC/CC sourcing and their certification status:

 

Metal

Smelter/Refiner

Certification Status

Mine Countries of Origin

Gold

CCR Refinery - Glencore Canada Corporation

LBMA, CFSP

Argentina, Australia, Canada, Chile, DRC- Congo (Kinshasa), Germany, Japan, Peru, Switzerland, United States, Zambia

Tantalum

Conghua Tantalum and Niobium Smeltry

CFSP

Brazil, China, Ethiopia, India, Niger, Rwanda, Thailand

Tin

CV United Smelting

CFSP

China, DRC- Congo (Kinshasa), Indonesia, Japan, Malaysia, Peru

Tantalum

Duoluoshan

CFSP

Bolivia, Brazil, China, Ethiopia, India, Japan, Malaysia, Niger, Nigeria, Rwanda, Thailand

Tin

EM Vinto

CFSP

Bolivia, Brazil, Canada, China, DRC- Congo (Kinshasa), Germany, Indonesia, Malaysia, Peru, Russia

Tantalum

H.C. Starck Co., Ltd.

CFSP

Australia, Bolivia, Brazil, Ethiopia, India, Mozambique, Namibia, Rwanda, Sierra Leone, Thailand, Zimbabwe

Tungsten

H.C. Starck GmbH

CFSP

Australia, Bolivia, Brazil, Canada, China, Estonia, Ethiopia, Germany, India, Japan, Mozambique, Namibia, Peru, Portugal, Russia, Rwanda, Sierra Leone, Spain, Thailand, United States, Zimbabwe

Tantalum

H.C. Starck GmbH Goslar

CFSP

Australia, Bolivia, Brazil, Canada, China, Ethiopia, Germany, India, Japan, Mozambique, Namibia, Rwanda, Sierra Leone, Thailand, United States, Zimbabwe

Tantalum

H.C. Starck GmbH Laufenburg

CFSP

Australia, Bolivia, Brazil, Canada, China, Ethiopia, Germany, India, Japan, Mozambique, Namibia, Rwanda, Sierra Leone, Zimbabwe

Tantalum

H.C. Starck Hermsdorf GmbH

CFSP

Australia, Bolivia, Brazil, Canada, China, Ethiopia, Germany, India, Japan, Mozambique, Rwanda

Tantalum

H.C. Starck Inc.

CFSP

Australia, Bolivia, Brazil, Canada, China, Ethiopia, Germany, India, Japan, Mozambique, Namibia, Rwanda, Sierra Leone, United States, Zimbabwe

Tantalum

H.C. Starck Ltd.

CFSP

Australia, Bolivia, Brazil, Canada, China, Ethiopia, Germany, India, Japan, Mozambique, Namibia, Rwanda, Sierra Leone, Zimbabwe

Tantalum

Hi-Temp Specialty Metals, Inc.

CFSP

Australia, Bolivia, Brazil, China, Ethiopia, India, Mozambique, Namibia, Rwanda, Sierra Leone, United States, Zimbabwe

Tantalum

Jiujiang Tanbre Co., Ltd.

CFSP

China, DRC- Congo (Kinshasa)

Tantalum

KEMET Blue Metals

CFSP

Burundi, Mexico, Mozambique, Niger, Nigeria, Rwanda

Tantalum

Kemet Blue Powder

CFSP

Burundi, China, DRC- Congo (Kinshasa), Mexico, Mozambique, Niger, Nigeria, Rwanda, United States

 

 
 
 

 

Tin

Malaysia Smelting Corporation (MSC)

CFSP

DRC- Congo (Kinshasa), Indonesia, Malaysia

Tin

Minsur

CFSP

Bolivia, Brazil, Canada, China, DRC- Congo (Kinshasa), Indonesia, Malaysia, Peru, Rwanda, Switzerland, Thailand, United States

Tantalum

Ningxia Orient Tantalum Industry Co., Ltd.

CFSP

Australia, Brazil, Burundi, China, Ethiopia, Malaysia, Mozambique, Niger, Nigeria, Rwanda, Switzerland

Tin

Operaciones Metalurgical S.A.

CFSP

Bolivia, Brazil, Canada, China, DRC- Congo (Kinshasa), Indonesia, Japan, Malaysia, Peru, Philippines, Russia, Thailand

Tin

PT Bukit Timah

CFSP

Australia, Bolivia, Brazil, Canada, China, DRC- Congo (Kinshasa), Indonesia, Malaysia, Peru, Russia

Tin

PT Stanindo Inti Perkasa

CFSP

Australia, Bolivia, Brazil, Canada, China, DRC- Congo (Kinshasa), Indonesia, Malaysia, Mozambique, Peru

Tin

PT Timah (Persero) Tbk Mentok

CFSP

Bolivia, Brazil, Canada, China, DRC- Congo (Kinshasa), India, Indonesia, Malaysia, Peru, Thailand

Tin

Thaisarco

CFSP

Australia, Bolivia, Brazil, Canada, Chile, China, DRC- Congo (Kinshasa), Indonesia, Japan, Malaysia, Morocco, Myanmar, Peru, Poland, Portugal, Rwanda, Thailand

Tantalum

Ulba Metallurgical Plant JSC

CFSP

Australia, Belarus, Brazil, Burundi, Canada, China, DRC- Congo (Kinshasa), Ethiopia, Japan, Kazakhstan, Mozambique, Russia, Rwanda, United States, Zimbabwe

Tungsten

Xiamen Tungsten Co., Ltd.

CFSP

Australia, Bolivia, Brazil, Canada, China, Germany, Japan, Mexico, Niger, Nigeria, Peru, Portugal, Russia, Rwanda, Spain, Thailand, United States, Vietnam

Tantalum

Zhuzhou Cemented Carbide

CFSP

Brazil, Burundi, China, DRC- Congo (Kinshasa), Japan, Kazakhstan, Malaysia, Niger, Nigeria, Russia, Rwanda

 

For those declaration responses provided at the company-level and non-specific to Oil States products, there was an indication of DRC/CC sourcing for three additional verified SORs1. Each of the 27 SORs1 provided at the product level has formal certification with the Conflict Free Sourcing Initiative (CFSI) designated as “CFSI Certified” or with the London Bullion Market Association (LBMA). At the company level, one of the three SORs with an indication of DRC/CC sourcing maintains involvement with the London Bullion Market Association (LBMA) or CFSI for certification. The only true unknown SORs of the DRC/CC subset are PT Pelat Timah Nusantara Tbk and China Nonferrous Metal Mining (Group) Co., Ltd.

 

Based on the information provided by suppliers at the product-level for reporting year 2015 and additional independent research, there were no SORs with indications of sourcing from an OECD Level 2 or Level 3 country. Additionally, there were no known or verified SORs at the product-level for which an unknown reserve was present.

 

For those declaration responses provided at the company-level and non-specific to Oil States products, the presence of any particular SOR, while a potential risk, is not an absolute within the supply chain due to the potential for false positives.

 

 

 

 

1 The information in the smelter/refiner database begins with supplier-provided information (CMRT data); Additional research (internet, industry and government associations) and outreach (email and telephone) is then performed directly with these companies to confirm the data provided via CMRTs. The Source Intelligence Smelter Verification and Outreach Process includes research in an attempt to verify types of metal processing performed (including exclusive recycling), mine countries of origin, conflict-free certification status, and due diligence measures being conducted for those entities who are not conflict-free certified.

 

 

 
 
 

 

3. Design of Due Diligence Framework

 

Oil States’ due diligence process is designed in accordance with the Organization for Economic Cooperation and Development’s (OECD’s) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and accompanying Supplements http://www.oecd.org/daf/inv/mne/GuidanceEdition2.pdf 2 . It is important to note that the OECD Guidance was written for both upstream 3 and downstream 4 companies in the supply chain. As Oil States is a downstream company in the supply chain, our due diligence practices were tailored accordingly.

 

 

2 OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Supplement on Tin, Tantalum and Tungsten and Supplement on Gold, 2013; http://www.oecd.org/daf/inv/mne/GuidanceEdition2.pdf.

3 Upstream companies refer to those between the mine and SOR. As such, the companies typically include miners, local traders, or exporters from the country of mineral origin, international concentrate traders and SORs.

4 Downstream companies refer to those entities between the SOR and retailer. As such, the companies typically include metal traders and exchanges, component manufacturers, product manufacturers, original equipment manufacturers (OEMs) and retailers.

 

 

 
 
 

 

4.

Due Diligence Measures Performed

 

Due Diligence measures undertaken by Oil States included the following:

 

 

●

Adopted a Conflict Minerals Policy. Our conflict minerals policy is publicly available at https://www.oilstatesintl.com/Corporate-Governance-1223.html

 

 

●

Assembled an internal team to support product scoping and supply chain due diligence

 

 

●

Established a system of controls and transparency over the mineral supply chain

 

 

●

Implemented internal measures to strengthen company engagement with suppliers

 

 

●

Included internal grievance mechanism in the Conflict Minerals Policy

 

 

●

Engaged with SORs to obtain mine of origin and transit routes and assessed whether SORs have carried out all elements of due diligence for responsible supply chains of minerals from conflict-affected and high-risk areas

 

 

●

Designed and implemented a strategy to respond to supply chain risks

 

 

●

Implemented a risk management plan, monitored and tracked risk mitigation, reported to senior management and evaluated supplier relationship

 

 

●

Undertook additional fact and risk assessments for risks requiring mitigation, or after a change of circumstances

 

 

●

Reported Annually on Supply Chain Due Diligence. This CMR and the Form SD to which it is an exhibit are publicly available at http://www.ir.oilstatesintl.com/sec.cfm.

 

 

5.

Steps to Improve Due Diligence

 

Oil States expects to take the following steps, among others, to improve our due diligence measures and to further mitigate the risk that the Subject Minerals contained in our products are financing conflict in the Covered Countries:

 

 

●

Continue to assess the presence of 3TG in the supply chain

 

 

●

Clearly communicate expectations with regard to supplier performance, transparency and sourcing

 

 

●

Increase supplier response rate for RCOI process

 

 

●

Increase supplier rate of product specificity for RCOI process

 

 

●

Continue to compare RCOI results to information collected via independent conflict free smelter validation programs such as the EICC/GeSI Conflict Free Smelter program

 

 

●

Provide continuing education to members of our Conflict Minerals Compliance team, as well as employees who are involved with supplier and customer contact related to Conflict Minerals compliance

 

 

6. Independent Private Sector Audit

 

A private sector audit is not required.


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