BUSINESS AND PROPERTIES OF WELLTECH
WellTech provides a broad range of workover and production services for
oil and gas wells in Oklahoma, Texas, Michigan, Pennsylvania and West Virginia.
WellTech is engaged in the business of providing: (i) workover rig services,
including completion of new wells, maintenance and recompletion of existing
wells (including horizontal recompletions) and plugging and abandonment of wells
at the end of their useful lives; (ii) oil field liquid transportation, storage
and disposal services, including vacuum truck services, frac tank rental and
salt water injection; and (iii) other services, including pipeline installation
and testing, slickline wireline services, fishing and rental tool services and
general oil field roustabout services. WellTech's services are utilized by major
oil and gas companies as well as independent producers to optimize performance
of oil and gas wells. In addition to its domestic operations, WellTech provides
equipment and services in Argentina and, until November 1995, conducted certain
operations in Russia. For the ten months ended October 31, 1995, WellTech
derived approximately 65%, 9% and 26% of its revenues from its workover rig
services, liquid services and other services, respectively.
WellTech was established in 1973 as a well servicing business. It
undertook significant expansion activities principally through internal growth
and the acquisition of well servicing assets in diverse geographic areas.
Commencing in 1992, WellTech consolidated its operations in those geographic
areas where it believed it could be the dominant or a significant factor in the
well servicing business and could realize consolidation savings through
operation of a greater number of rigs with lower management and overhead costs
per rig operated. In addition to expanding its workover rig service business,
WellTech entered into complimentary businesses thereby increasing its asset base
and market share through diversification by service line. At the same time,
WellTech commenced to withdraw operations from less profitable geographic areas
where lower costs could not be realized.
WellTech believes that its ability to offer a wide range of services
provides it with a competitive advantage by allowing its customers to
consolidate with fewer vendors the procurement of workover and production
services. Customers may thereby lower their costs by streamlining production
decisions and increasing operational efficiencies. WellTech believes that no
single competitor in WellTech's primary market areas provides a range of
services as extensive as the services provided by WellTech. WellTech believes
that its strategy creates cross-marketing opportunities for its services and
appeals to a broader customer base by enhancing its position as a one-step
source for workover and production services.