contract between the Russian Oil Ministry and Seis. In addition, WellTech
provided supervisory and rig personnel during the term of the contract pursuant
to the provisions of a labor contract. The contract was completed in November
1995. WellTech no longer conducts operations in Russia although discussions
continue for additional opportunities in Russia.
In 1992 WellTech, with two Argentine corporate partners, formed
Servicios WellTech, S.A. ("Servicios") for the purpose of conducing well
servicing operations in Argentina. WellTech owns 63% of the stock of Servicios.
Currently, Servicios owns and operates 10 well servicing rigs in Argentina. In
addition, Servicios operates trucks to transport its oilfield equipment from one
location to another and, subject to availability, rents the trucks to other
operators to move their oilfield equipment. Servicios' principal customer is
Yacimientos Petroliferos Fiscales, the Argentine government owned and operated
oil company. Servicios believes that it provides superior equipment and services
and enjoys a high level of customer satisfaction. Servicos competes with three
drilling/workover companies with dominant market share, each with 40 to 90 rigs.
Profitability of Servicios has been adversely affected by undercapitalization
and high interest rates on funds required to expand operations.
As of January 12, 1996, WellTech employed approximately 1,125 persons
(including 250 persons employed by Servicios), consisting of 580 in the
Mid-Continent Region, 285 in the Northeast Region, 10 in the Houston, Texas
corporate office, and 250 in Argentina. Employees provided by the Northeast
Region in the State of Indiana for a certain industrial facility were provided
pursuant to a union agreement with International Union of Operating Engineers.
Efforts in late 1995 of the International Union of Operating Engineers to
organize WellTech's labor force in Countyline, Oklahoma were unsuccessful.
WellTech has experienced no work stoppages associated with labor disputes or
grievances and considers its relations with its employees to be satisfactory.
WellTech is a party to numerous workers' compensation claims, general
and automotive liability actions and other types of lawsuits, none of which is
expected to have a material adverse effect on the financial condition or results
of operations of WellTech.
Competition and Other External Factors
The need for oil field services fluctuates, in part, from the demand for
oil and natural gas. As demand for those commodities increases, service and
maintenance requirements increase. WellTech competes with other local oil field
service companies as well as national service companies. WellTech believes that
the reputation that it has developed in oil field service operations contributes
greatly to its competitive position.