National Oilwell Varco 2000 Annual Report Download - page 3

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Item 1. Business
GENERAL
National Oilwell is a worldwide leader in the design, manufacture and sale of comprehensive systems and
components used in oil and gas drilling and production, as well as in providing supply chain integration services to
the upstream oil and gas industry.
National Oilwell manufactures and assembles drilling machinery, including drawworks, mud pumps and top drives,
which are the major mechanical components of drilling rigs, as well as masts, derricks and substructures. Many of
these components are designed specifically for more demanding applications, which include offshore, extended
reach and deep land drilling. We also provide electrical power systems, computer control systems and automation
systems for drilling rigs. Our systems, including the Cyberbase™ and automated pipe handling systems, are used in
many of the industry’s most technologically demanding applications. In addition, we provide engineering and
fabrication services to integrate our drilling products and deliver complete land drilling and workover rigs as well
as drilling modules for mobile offshore drilling rigs or offshore drilling platforms.
Our Products and Technology segment also designs and manufactures drilling motors and specialized downhole
tools for rent and sale. Drilling motors are essential components of systems for horizontal, directional, extended
reach and performance drilling. Downhole tools include fishing tools, drilling jars, shock tools and other
specialized products.
Our Distribution Services segment offers comprehensive supply chain integration services to the drilling and
production segments. Our network of service centers located in the United States and Canada and near other major
drilling and production activity worldwide use state of the art information technology platforms to provide
procurement, inventory management and logistics services. These service centers stock and sell a variety of
expendable items for oilfield applications and spare parts for equipment manufactured by National Oilwell.
BUSINESS STRATEGY
National Oilwell's business strategy is to enhance its market positions and operating performance by:
Leveraging our Installed Base of Drilling Machinery and Equipment
We believe our market position and comprehensive product offering present substantial opportunities to capture a
significant portion of expenditures for the construction of new drilling rigs and equipment as well as the upgrade
and refurbishment of existing drilling rigs and equipment. Over the next few years, the advanced age of the existing
fleet of drilling rigs, coupled with drilling activity involving greater depths and extended reach, is expected to
generate demand for new equipment. National Oilwell's automation and control systems offer the potential to
improve the performance of new and existing drilling rigs. The large installed base of our equipment also provides
recurring demand for spare parts and expendable products necessary for proper and efficient operation.
Expanding the Downhole Products Business
We believe economic opportunities for directional, horizontal, extended reach and other value-added drilling
applications will increase, providing an opportunity for growth in the rental and sale of high-performance drilling
motors and downhole tools.
Building on Information Technology and Process Improvement Strategy
National Oilwell has developed an integrated information technology and process improvement strategy to enhance
procurement, inventory management and logistics activities. As a result of the need to improve industry efficiency,
oil and gas companies and drilling contractors are frequently seeking alliances with suppliers, manufacturers and