Grant Prideco, Inc. History
Houston, Texas 77056
Telephone: (832) 681-8000
Fax: (832) 681-8499
Incorporated: 1975 as Grant Corporations
Sales: $639.7 million (2002)
Stock Exchanges: New York
Ticker Symbol: GRP
NAIC: 333132 Oil and Gas Field Machinery and Equipment Manufacturing
Grant Prideco, Inc. is the world's largest manufacturer and supplier of oilfield drill pipe and other drill stem products and one of the leading North American providers of high-performance premium connections and tubular products.
- Engineer Charles Grant forms the Grant Supply Company.
- Holding company Grant Corporations is formed.
- Energy Ventures Inc. buys a stake in the company.
- The company becomes a wholly owned EVI subsidiary.
- A merger with Prideco results in Grant Prideco, Inc.
- Parent corporation EVI goes public.
- EVI merges with Weatherford Enterra, resulting in Weatherford International.
- Grant Prideco is spun off and becomes an independent, publicly traded company.
- Grant Prideco pays $350 million in cash and stock to buy Reed-Hycalog from Schlumberger Ltd.
Grant Prideco, Inc., based in Houston, Texas, is one of the world's largest manufacturers and distributors of piping and other drill stem products used by oil field drillers. The company also offers premium connections and tubular products, and in recent years has begun to offer products and services to offshore and deepwater drillers. Grant Prideco has three primary business units. The first, Drilling Products and Services, manufactures and sells such items as drill pipe, drill collars, heavyweight drill pipe, and accessories. This segment serves both land and offshore drilling operations. Tubular Technology and Services offers a complete line of premium connections and related premium tubular products and accessories for use in harsh conditions associated with gas wells, offshore wells, and other wells subject to high temperatures, high pressure, or difficult environmental conditions. The last Grant Prideco business segment is its newest, Marine Products and Service. It offers a line of proprietary connections and installation services for offshore operations and subsea wells. In addition, Grant Prideco sells drill bits and related items through its ReedHycalog subsidiary.
The Founding of the Company in 1960
The roots of Grant Prideco reach back to 1960 when engineer Charles Grant founded Grant Supply Company in Tulsa, Oklahoma. Initially the company served as a distributor of pipe, valves, and fittings to oil refineries and petrochemical companies. In 1970 Grant set up a new operation, located in Houston, called Grant Oil Company Tubular Corporation, specializing in the distribution of tubular goods to oil field drilling operations. A year later Grant Supply moved into Canada, establishing a subsidiary in Calgary, Canada, called Grant Corporations Ltd. To organize his slate of businesses, in 1975 Grant established Grant Corporations, a Houston-based holding company. His next step came in 1978 with the launch of a finishing and processing plant for pipe and tube named Tubular Finishing Works Inc. (TFW), located in Navasota, Texas. Five years later TFW expanded by opening a plant in Bastrop, Texas.
Although for two decades Grant Supply had been able to succeed in the highly cyclical oil industry, in the early 1980s the company expanded too rapidly in response to strong demand for its products and took on an excessive amount of debt. By the mid-1980s Grant Supply operated six sales offices, located in Tulsa, Oklahoma; Bakersfield, California; Baton Rouge, Louisiana; and in Houston, Odessa, and Pampa, Texas. It contributed approximately 60 percent of the revenues generated by Grant Corporations. In October 1986 Grant Supply filed for Chapter 11 bankruptcy protection. According to filings, the company reported liabilities of nearly $60 million and assets of approximately $33 million.
With the demise of its original business, Grant Corporations, renamed Grant TFW, entered a new phase of its history in 1987 when Energy Ventures Inc., through a subsidiary called EVI, acquired a 32 percent stake in the company. Energy Ventures had been established as an offshore oil and gas producer. It had been in liquidation proceedings in 1985, the result of a settlement agreement that avoided a hostile takeover of the company, but because of a slump in the price of oil and gas properties, the sale was called off by the two firms that held 82 percent of the stock: Apco Oil Liquidating Trust and Appalachian Co., the firm that had launched the takeover bid. Given a reprieve, Energy Ventures began to prosper, driven in large part by acquisitions engineered by its EVI subsidiary, which was dedicated to picking up oil field equipment and service companies, such as Grant TFW, which were in need of capital as well as restructuring in order to achieve renewed growth.
EVI Gains Control in 1988
In 1988 EVI gained a 67 percent interest in Grant TFW, took control, and began to change the company's focus. Within the year Grant TFW shifted from distribution to the manufacture of two products, drill pipe and premium tubulars. By 1990 EVI brought the remaining stock to make Grant TFW a wholly owned subsidiary, which now launched an effort to strengthen its position in the energy industry. Later in the year the first step was taken: Grant TFW acquired the assets of a Baker Hughes operation, Hughes Tool Company's Tool Joints Division. In one stroke, Grant TFW became one of the world's largest manufacturers and suppliers of completed drill strings, its product lines including drill pipe, heavyweight drill pipe, and drill collars. In the deal Grant TFW picked up a number of Hughes's patented and proprietary tool joint designs, manufacturing processes, and international licensing agreements. Of particular importance was the acquisition of the Tuff-Weld process. As a result of adding the Hughes Tool Joints assets, Grant TFW launched its H-SERIES product line, creating a one-stop shopping approach to completed drill strings. Over the course of the first half of 1991, Hughes Tool Joints assets were relocated and incorporated into Grant TFW plants.
The next major acquisition occurred in 1992 when Grant TFW bought the operating assets of Atlas Bradford from Barcid Corporation and added premium threaded tubular connectors to its product mix. Included in the deal were machinery, equipment, technology, patents, sales offices, and a roster of licenses--as well as an influx of experienced personnel to spur continued growth. As had been the case with the Hughes Tool acquisition, Atlas Bradford was an excellent fit, its assets rounding out Grant TFW's premium tubular line. Moreover, in 1992 the company's plants were expanded and the distribution network broadened, making Grant TFW's products and services available worldwide. Sales offices were now found domestically in Houston and Dallas, Texas; New Orleans and Lafayette, Louisiana; and internationally in Aberdeen, Scotland; The Hague, The Netherlands; Singapore; Caracas, Venezuela; Pau, France; and Dubai, Arab Emirates. Grant TFW then bolstered its manufacturing capabilities in 1993 by acquiring a threading facility in Channelview, Texas, as well as leasing a drill pipe manufacturing plant located in Veracruz, Mexico. With a rising demand for premium tubular products, the company then acquired a tubular processing plant in Bryan, Texas, in August 1994. Six years earlier the facility, which had been built and opened in 1980, had been shut down due to a downturn in the oil industry. The plant, reactivated in the autumn of 1994, was an ideal pickup for Grant TFW because its equipment was specifically designed to manufacture the type of tubular products that the company now offered. Moreover, the equipment was relatively new, showing little wear and tear. It was also in 1994 that Grant TFW became involved in the international premium tubular market, when it introduced the TC-II line of premium casing and tubing connections under the Atlas Bradford name, a brand that to this point was sold in the United States only.
The most significant acquisition in the company's history occurred in 1995. In a stock and cash deal EVI acquired Prideco Inc., which manufactured and marketed drill pipe, heavyweight drill pipe, and drill collars. The company was 60 percent owned by Wisconsin-based Christiana Companies, Inc., which was primarily a public refrigerated warehousing and services firm that served midwestern food and consumer product companies. EVI then merged Prideco with Grant TFW, forming Grant Prideco, the largest manufacturer and supplier of drill pipe in the world, as well as one of North America's top makers of premium tubular products. With the addition of Prideco products, the company was now able to complete its H-SERIES line.
Grant Prideco's management opted to continue its growth through external means. It strengthened its position in the Asian market in 1995 by signing a manufacturing and sales agreement with Oil Country Tubular Limited (OCTL) in Hyderabad, India, in order to produce drill pipe and process premium tubulars. In 1996 Grant Prideco acquired Superior Tube Limited, an Edmonton, Canada-based company that was the only producer of drill pipe and premium tubulars in the Canadian market. Next Grant Prideco bolstered its position in the premium tubular business by acquiring Houston's Enerpro International Inc. As a result, Grant Prideco now offered the most complete line of premium threads in the industry. Further in 1996, the company added Tubular Corporation of America (TCA), an Oklahoma maker of premium tubing and casings. Because TCA's name was well known in the industry, Grant Prideco opted to run it as a semi-autonomous division using its old name. To help pay for the expansion of Grant Prideco, parent corporation EVI went public in 1996, netting close to $95 million, part of which was used to finance the TCA deal. Another 1996 acquisition also resulted in the operating of semi-autonomous divisions, that of Texas Arai, a Houston-based company that was the world's largest manufacturer of couplings. Both it and subsidiary Tube-Alloy, the world's top maker of coupling accessories, were left to do business under their old names.
Grant Prideco continued to pursue an aggressive acquisition strategy in 1997, completing four purchases. XL Systems, maker of high performance connectors for marine applications, was added first. XL Systems' products included conductors, risers, and offshore structural components. Manufacturing facilities were located in Beaumont, Texas, and Rotterdam, The Netherlands, with sales and service operations in Houston, New Orleans, Aberdeen, Dubai, and Cairo, Egypt. XL Systems would be operated as a separate division. Next in 1997 was the purchase of Houston-based Coastal Tubular Inc., a larger-diameter casing threader, whose operation meshed well with the Channelview facility. This deal was followed by the addition of RTD, a Singapore maker of drill collars and accessories, a move that helped Grant Prideco to strengthen its bid to expand into the important Asia Pacific and Australian markets. The final transaction of 1997 was a joint venture established with P.T. Citra Tubindo, an Indonesian company. The result was Citra Grant Prideco Marketing, a company that had a nonexclusive license to manufacture, market, and sell the H-SERIES drill pipe products. It also served as the exclusive marketing agent for H-tech and OCTL drill pipe products in Australia and select Asia Pacific countries.
In 1998 Grant Prideco's management made a major commitment to establishing a research and development program to create new and innovative products. The company built a laboratory on the original site of Hughes Tool Company. Also of significance in 1998 was the merger of EVI with Weatherford Enterra, resulting in Weatherford International. Despite changes with its corporate parent, Grant Prideco continued its acquisition binge. In February 1998 it bought Drill Tube International, Inc., and later in the year acquired an affiliate of Tubos de Acero de Mexico, S.A. Grant Prideco was even more active in 1999, adding Texas Pup, Inc., a controlling interest in Voest-Alpine Stahlrohr Kindberg GmbH & Co., Louisiana-based Petro-Drive, and Drill Pipe Industries, Inc.
Becoming Independent in 2000
In April 2000 Grant Prideco became an independent, publicly traded company when Weatherford decided to spin off the business through a distribution to its stockholders. The company now organized its business into three main divisions: Drilling Products and Services Premium Connections; Tubular Products; and Marine Products and Services. By the end of 2000 Grant Prideco was once again expanding by external means, in a matter of weeks acquiring Ideal Machine and Supply, Inc.; Star Iron Works, Inc.; Seam-Mac Tube, Ltd.; and Italian tool joint manufacturer CMA, Inc. In 2001 Grant Prideco acquired Intellipipe, Inc. It continued to broaden its international reach in 2002 by acquiring a controlling interest in a Chinese maker of drill pipe to the Asian markets. Also in 2002 Grant Prideco bought a controlling interest in Rotator AS, and the right to buy the remaining stock two years later. Rotator was a leading maker of subsea control systems and valves, and greatly enhanced Grant Prideco's new Marine Services Division. In September 2002 the company closed on the acquisition of Wyoming-based Grey-Mak Pipe, Inc., but reserved its largest and most significant transaction for the end of the year. In December it paid $350 million in cash and stock to buy Reed-Hycalog from Schlumberger Ltd., the giant oil field service company. Reed-Hycalog was the third largest maker of drill bits, but it was not considered a core asset to Schlumberger, which was shedding assets in order to reduce debt load. For Grant Prideco, Reed-Hycalog offered an excellent opportunity to achieve some product diversity. Of significance was the tendency of the drill bit category to recover from drilling slumps more rapidly than drill pipe.
Grant Prideco's commitment to research and development began to be reflected in improvements in the company's product lines, especially when it came to performance in harsh environments. The company was especially optimistic about the potential of the Intellipipe telemetry product it developed in conjunction with Novatek Engineering. Going forward the company looked to concentrate further on utilizing materials that could withstand corrosive environments.
Despite diversification efforts and the establishment of a dominant position in its industry, Grant Prideco was still not immune from the cyclical nature of oil and gas drilling, which in 2001 was exacerbated by an economic slump. Starting in mid-2001 the company began to trim jobs as part of an effort to cut costs. By the end of 2002 Grant Prideco eliminated about 1,200 jobs. In 2003 the company announced that it was shutting down its Bryant, Texas plant.
Principal Subsidiaries: Texas Arai, Inc.; Tube-Alloy Corporation; XL Systems, L.P.
Principal Competitors: Lone Star Technologies, Inc.; RPC, Inc; Smith International, Inc.
- Antosh, Nelson, "Houston-Based Maker of Oil-Field Pipe to Buy Drill-Bits Manufacturer," Houston Chronicle, October 29, 2002.
- "From Humble Beginnings to a World Class Organization," Oil & Gas Investor, October 2002, pp. 2-3.
- "Leading the Way," Oil & Gas Investor, October 2002, pp. 4-5.
- "Looking Toward the Future," Oil & Gas Investor, October 2002, pp. 14-15.
- Sapino, Brenda, "Ch. 11 Filing to Aid Grant Supply Sale," American Metal Market, October 15, 1986, p. 4.
Source: International Directory of Company Histories, Vol. 57. St. James Press, 2004.