AMM.com Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5


Tenaris, Vallourec say drillers’ cost-saving moves affect mix

Keywords: Tags  Tenaris, Vallourec, Paolo Rocca, Phillipe Crouzet, Olivier Mallet, drilling, drill rigs, oil country tubular goods OCTG


NEW YORK — A growing cost-savings drive by companies in the domestic drilling sector has had an impact on product mix, according to two large tube and pipe makers.

"Clearly, there is a push from the oil companies operating in the shale space to reduce their costs as much as they can, and we see some shift from full-premium connections to semi-premium connections," Paolo Rocca, chairman and chief executive officer of Tenaris SA, said during the Luxembourg-based company’s first-quarter earnings conference call.

Vallourec SA executives echoed that view during their company’s first-quarter conference call.

"It is an industrial activity, meaning that operators are looking for cost-optimization," said Didier Hornet, managing director of Vallourec’s oil country tubular goods (OCTG) division. "We still see an increase of premium joints, but we also see an increase of semi-premium offering. And to some extent recently, the growth rate of semi-premium has been slightly above premium joints."

The switch also comes as "the market is now more oil-oriented than gas-oriented," with fewer premium connections needed for oil drilling, Vallourec chairman Philippe Crouzet said.

The Boulogne-Billancourt, France-based company maintained its positive outlook for the drill rig count this year. "The rig count is likely to recover progressively within the next months, and ... the quality of the rig fleet is improving, which will mean more OCTG consumption per rig," Crouzet said.

In contrast, Tenaris predicted that U.S. drilling likely will not recover until the end of the year (amm.com, May 2).

However, while the rig count might rise, Vallourec does not expect to see OCTG prices go anywhere in the near-term. "We don’t see any trend allowing us to increase prices," chief financial officer Olivier Mallet said during the conference call. "On the other hand, there’s no price decline expected anymore in the U.S. market at this point."


Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.



Latest Pricing Trends