In With The New

June 27, 2005
Maverick Tube Corp.'s R&D efforts pay off as customers find new applications for coiled tubing.

One of the most surprising things about the expansion of Maverick Tube Corp.'s Houston coiled-tube plant is that it has nothing to do with economic growth in China. Rather, chalk one up for good old American ingenuity.

The $12 million expansion to increase capacity by 50% is all about new product development and finding new applications for existing products.

"Since 2002, worldwide demand for our coiled tubing products has grown steadily, and we anticipate this trend to continue," says Dennis Dunlap, president of the expanding Maverick subsidiary, Precision Tube/SeaCAT. "Our success with coiled tubing products . . . demonstrates our ongoing commitment to growth and technological advancement."

Richard W. Preckel, a spokesman for the St. Louis-based company, says improved technology has made its highly engineered coiled metal tubing an attractive alternative for servicing and drilling oil and gas wells. He cites a US$17 million agreement with Stat Oil, the state-owned energy company in Norway. Prolific collaboration between Maverick and Stat engineers last year yielded product advances that Maverick now can sell to other customers. This focus on innovation comes at a good time: Customers in the energy sector are eager for new tools.

According to a product history from the International Coiled Tubing Association, Longview, Texas: "Coiled tubing first established its niche in the marketplace as a cost-effective well cleanout tool. In recent years, these conventional wellbore cleanouts and acid stimulation jobs accounted for more than three quarters of total coiled tubing revenue. However, coiled tubing use has continued to expand as it is adopted for use in additional field operations. Most recently, coiled tubing fracturing and drilling applications have emerged as two of the fastest growth areas."

The association says revenue from these last two applications has grown from almost zero 10 years ago, to about 15% of global coiled tubing revenues recently.

This trend helped Maverick, which has 3,000 employees, increase net income in 2004 to $193.8 million, up from $23 million in 2003.

That year, SeaCAT itself was only five years old when Maverick purchased it for $9 million cash plus 733,676 shares of stock. (Maverick acquired Precision Tube in 2002 and later merged the two.)

Gregg Eisenberg, Maverick president and CEO at the time, praised SeaCAT for establishing a niche in the "rapidly growing deep-water oil and gas development activities in the Gulf of Mexico and around the world."

The Houston expansion of the Precision Tube/SeaCAT is expected to be complete by the first quarter of 2006.

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