October 1999 Vol. 220 No. 10  Drilling

Robert E. Snyder,  Editor

Buying/selling companies and equipment, other news

Mergers continue in the U.S. drilling industry. In mid-August, Unit Corp. announced that it signed a definitive agreement with Parker Drilling Co. of Tulsa, Oklahoma, to purchase the latter’s domestic onshore U.S. drilling assets, excluding Alaska. Unit will buy 13 large or deep-capacity rigs for $40 million in cash and 1 million shares of common stock.

All 13 rigs are diesel-electric, deep-drilling rigs, with power ratings from 1,000 to 4,000 hp. Depth capabilities range from 16,000 to 30,000 ft. The rigs are fully equipped and are, reportedly, in excellent condition. Seven are located in the Rocky Mountains; three in South Louisiana and three in South Texas — at present, all are actively marketed.

Unit’s King Kirchner, Chairman and CEO said, "Seven of the rigs are comparable to the bigger end of our fleet, while six are even larger, We believe gas drilling offers the greatest growth opportunity in the domestic market." The acquisition increases Unit’s onshore fleet to 47 rigs. It has provided onshore drilling services in Oklahoma and Texas since 1963.

Effective July 31, Sundowner Offshore Services, Inc. merged "with and into" its wholly owned subsidiary Nabors Offshore Drilling, Inc. Nabors Offshore Corp. is the surviving entity and the official name. The company notes in its release that customers should continue to work with and address all correspondence to the "same Sundowner / Nabors personnel with whom they have worked in the past."

On the service / supply side, Weatherford International, Inc., announced that it has completed its acquisition of Dailey International, Inc. Dailey is a leading provider of specialty drilling equipment and services, and it designs, manufactures and rents proprietary downhole tools. Houston-based Weatherford is one of the largest global providers of engineered products and services to the drilling / production sector.

Weatherford has further announced that the company’s Grant Prideco subsidiary has acquired a controlling 54% interest in H-Tech, a Singapore-based drill pipe manufacturer with facilities on Batam Island. Grant Prideco will assume operating and marketing responsibility for H-Tech, which is a major regional manufacturer and supplier of drill pipe and accessories. H-Tech’s modern facility in Batam is strategically located to serve Far Eastern and Middle Eastern oil / gas markets, with rated capacity exceeding 1 million feet of drill pipe per year.

And, on September 2 and 15, respectively, Weatherford continued its buying spree by adding Petroline WellSystems of Scotland and Williams Tool Co. of Fort Smith Arkansas. This makes the 16th and 17th companies Weatherford has bought, or bought into, in the last 12 months — all connected with the drilling / completion business.

Drilling barges for Lake Maracaibo. In another major commercial move, TDI-Halter, a Halter Marine Group, Inc. company, delivered Prisa 103, the last of three newly built drilling barges, measuring 180 ft´ 75 ft´ 15 ft, to Sedco Forex, during the first quarter of 1999. Prisa 101, 102 and 103 are part of an overall conceptual design approach, in which Sedco permanently integrated the well intervention structure, equipment and systems to facilitate conventional light drilling and well re-re-entry with coiled tubing and other well-intervention operations.

The builder says this concept provides operators a cost-effective tool by utilizing specially-adapted, built-in, multifunction service equipment. This concept was instrumental in Sedco obtaining long-term, full-service contracts with PDVSA for Lake Maracaibo operations.

Prisa 103 commenced the tow to Venezuela in March, to begin work on a ten-year contract with PDVSA. Prisa 101 and 102 are also working for PDVSA on 10-year contracts.

One source of rig hands. A recent news release from Texas’ Railroad Commissioner Charles R. Matthews, zeroes in on the finding and promoting of natural gas as an "environmentally friendly product." In approving the 1999 Electric Restructuring Bill, the Texas Legislature expressed two intentions for gas. The first is that its use be promoted; the second is that its cost remain low. Matthews says, "No one questions that a demand exists for natural gas and that an adequate supply of it is in the ground. The problem will be ensuring that gas gets from the ground to the marketplace at a reasonable price."

Matthews says experts in the energy field expect U.S. gas demand to grow during the next decade. By 2010, it is projected to be more than 30% over the 1998 level. The biggest driver for that growth will be gas-fired electric generation. Texas, like other states, is restructuring its electric generation and transmission industry from a regulated monopoly to a competitive market. The electric restructuring bill will allow non-utility generators to compete with the utility generators. The new players are building electric generation plants, and most will be gas-fired.

Matthews points out that the demand for natural gas most certainly exists, and the resource is in the ground. The problem is how to stimulate production and ensure that the necessary infrastructure to move gas to consumers remains available. In the long run, the market will answer most of these concerns. But regulatory policy certainly influences how the market responds.

Drilling a new well usual takes at least six months. Hence, it is important that there are no unnecessary regulatory obstacles to getting a well permitted. Obviously, certain rules and regulations are necessary to protect the environment, ensure safe operations, and promote efficient recovery of Texas’ gas resources, but "I will do all in my power to speed up the permitting process, whatever appropriate," Matthews says.

Also, he says, the drilling of wells shouldn’t be delayed due to a lack of a skilled workforce. "To that end, I worked last year to establish a program between the Texas Workforce Commission and West Texas Regional Training Center / Texas A&M University System, Texas Engineering Extension Service in Abilene to train recently paroled inmates as rig hands. As drilling rebounds in response to the increased demand, the program could provide as many as 1,100 trained hands each year to replace those who left the industry in difficult times."

Sounds "interesting." If you want more information on this subject, contact Commissioner Matthews through Melissia Columbus, Austin, Texas, Tel. 512 463 7142, Fax. 512 463 8463.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company