National Oilwell Varco 2003 Annual Report Download - page 4

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We design and manufacture masts, derricks and substructures for use on land rigs and on fixed
and mobile offshore platforms suitable for drilling applications to depths of up to 30,000 feet or
more. Other products include cranes, jacking and mooring systems, reciprocating and centrifugal
pumps and fluid end expendables for all major manufacturers' pumps. Our business includes the
sale of replacement parts for our own manufactured machinery and equipment.
We also design and manufacture electrical systems and control and data acquisition systems for
drilling related operations and automated and remotely controlled machinery for drilling rigs.
Our control systems can control and monitor many simultaneous operations on a drilling rig and
often form the basis for our state-of-the-art driller’s cabin. Our automated pipe handling system
provides an efficient and cost effective method of joining lengths of drill pipe or casing, as does
our iron roughneck. These and similar technologically advanced products can greatly improve the
safety on rigs, often by reducing the number of persons working on the drilling floor.
While offering a complete line of conventional rigs, National Oilwell has extensive experience in
providing rig designs to satisfy requirements for harsh or specialized environments. Such
products include drilling and well servicing rigs designed for the Arctic, highly mobile drilling
and well servicing rigs for jungle and desert use, modular well servicing rigs for offshore
platforms and modular drilling facilities for North Sea platforms. We also design and produce
fully integrated drilling equipment packages for offshore rigs.
National Oilwell designs and manufactures drilling motors, drilling jars and specialized drilling
tools for rent and sale. We also design and manufacture a complete line of fishing tools, used to
remove objects stuck in the wellbore, and progressive cavity pumps.
Distribution Services
National Oilwell provides distribution services through its network of 146 distribution service
centers. National Oilwell’s distribution service centers are located throughout the oil and gas
producing regions of North America, with 92 in the United States, 40 in Canada, and the
remainder in various international locations. These distribution service centers stock and sell a
variety of expendable items for oilfield applications and spare parts for our proprietary
equipment. As oil and gas companies and drilling contractors have refocused on their core
competencies and emphasized efficiency initiatives to reduce costs and capital requirements, our
distribution services have expanded to offer outsourcing and alliance arrangements that include
comprehensive procurement, inventory management and logistics support. In addition, we believe
we have a competitive advantage in the distribution services business by distributing products
manufactured by us and from the association of this business with our Products and Technology
segment.
The supplies and equipment stocked by our distribution service centers vary by location. Each
distribution point generally offers a large line of oilfield products including valves, fittings,
flanges, spare parts for oilfield equipment and miscellaneous expendable items.
Most drilling contractors and oil and gas companies typically buy supplies and equipment
pursuant to non-exclusive contracts, which normally specify a discount from list price for each
product or product category. Our goal is to create strategic alliances with our customers whereby
we become the customer's primary supplier of those items. In certain cases, we assume
responsibility for procurement, inventory management and product delivery for the customer,
occasionally by working directly out of the customer's facilities.
We believe e-commerce brings a significant advantage to larger companies that are
technologically proficient. Our e-commerce system can interface directly with customers’