Tercel delays acquisition of ITS factory at Taloja

Vol 16, PW 1 (26 Jul 12) Exploration & Production
     

Dubai-based Tercel Oilfield Products has put on hold its planned acquisition of a drilling equipment factory from Aberdeen-based ITS Energy near Mumbai.

"It came as a shock to me when I heard it has been put on hold," says a source. "In March everyone thought the deal was done.

" Set up in December 2009, the ITS facility at Vavanje village near Taloja in the Raigad district of Maharashtra has two machine shops: one providing support and repair services for down hole equipment, the second with a capacity to manufacture 15 drilling ‘jars’ a month. “Tercel has a big product range,” he adds.

“They want to start making their own products at Taloja and make India a regional hub.” ITS management was told in May this year to prepare to move on to Tercel's payroll following an on-site visit to the 5.5-acre factory site by three Tercel executives: one from Houston and two from the company's Nasik facility, manufacturing drill-bits for water and mineral drilling.

ITS is the only company in India manufacturing drilling 'jars' - not to be confused with fishing ‘jars’ - a common hydraulic tool used to dislodge stuck drill-strings. For the past eight months production has ceased because of poor market conditions.

ITS' decision to sell is no surprise, say some. "No one could compete with their pricing," we hear.

"They are known to rent 'jars' for as low as $65/day when the industry standard is $180-$200/day." Unlikely to have helped is Schlumberger's $11bn acquisition of Smith International in February 2010.

"Their (ITS) market in India was cut by half when Schlumberger bought Smith," he adds. "Smith manufactures its own 'jars'".