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Technical Focus

Fast Fax Enquiry No. 88

worth of work. This is why Varel invests more time upfront with the customer. We want to understand their drilling objectives and parameters and the specifics about the drilling system so that we can design the right bit for the specific project. This process improves drilling optimization and reduces costs.

Other trends I see, particularly where drill bits are concerned as that is where my expertise lies, include more advancements in cutter technology for PDC bits. For several years now cutter technology has been the buzz word in the drill bit industry and justifiably so, as cutters make up about one-third the cost of PDC bits. Advancements in cutter technology, by way of new or advanced manufacturing processes, more R&D and customer-endorsed field testing will improve drilling performance and reduce drilling costs.

Are there any plans to manufacture drill bits in the Middle East? Varel’s philosophy is to be flexible and agile in order to meet customer needs and expectations. Ultimately, manufacturing efficiencies increase and costs decrease when you can strategically locate your supply point as close to the customer as possible. Obviously there is a significant capital

88 Oil Review Middle East Issue Five 2007

Varel’s philosophy is to be flexible and agile in order to meet customer needs and expectations

investment required to implement this. To date, we have not planned building a manufacturing facility in the Middle East, but because of the projected growth of this region and their culture of quick adoption of emerging technologies, it is an attractive market to consider for such a possibility.

What benefits have been derived since 2005 from KRG’s involvement? The inclusion of KRG Capital Partners as an investor has significantly changed the foundation of Varel’s business and for the better. During preliminary discussions it became evident that KRG believed in the vision we had for Varel and was willing to quickly fund this vision to help us achieve our goal—to be a leading global drill bit company. In less than two years, KRG has invested and seen an incredible return on investment by funding many of the capital investment

projects we needed. When you are a smaller company growing as fast as we were, your, what I call, “internal systems” are often sacrificed. Such internal systems are accounting, procurement, IT to name a few. But when KRG bought Varel they quickly came in and helped us revamp and even establish all of these important internal systems— systems critical to the overall foundation and ultimate growth of a company. In addition, KRG has funded most of our lean manufacturing project for our growing roller cone business; their support has helped us double our PDC manufacturing capacity and they have enriched our talent pool by introducing systems and efficiencies that help us attract, train and retain top talent.

Does Varel suffer from counterfeiting of its products in the Middle East? The global drill bit market is extremely competitive. Companies have to be well- funded to break-even and well-funded with the right processes, differentiating technologies, and strong customer base to be successful. All drill bit companies are looking to deliver new and differentiating technologies, but the reality is that companies that attempt to counterfeit such technologies will never fully catch up to

Niche technical expertise






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Fast Fax Enquiry No. 87

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