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Interview

with Stig Dahl, Managing Director, Dahl Oilfield Services A.S.

08.04.2013 / Energyboardroom

As you founded Dahl Oilfield Services in 2007, what opportunities have you come across over the past six years?

Designing new products and meeting the customer’s demand has been my main priority since I founded the company. From our in-house designs, we have developed a range of drill string components such as spiral drill collars and drill pipes. These collars add weight on the back of the drill bit to ensure effective and safe drilling. Furthermore, our products, unlike conventional drill collars, function automatically, thereby reducing the amount of people needed on the deck to handle them manually.

To establish these designs we have worked in partnership with Fearnly Procter Group. From our collaboration on the design review, NS1 certificate approvals are issued, and our designs are then sold to many drill companies.

These products are used throughout the Norwegian Continental Shelf (NCS), and in the North Sea. They ensure worker’s safety in dangerous areas of the rig, especially in the red zone. In addition, the equipment is highly efficient, reducing operation’s time. We are one of the few companies in Norway to sell drill string components.

Our competitors, mainly the big mills, are not represented here in Norway. As a local Norwegian company, we are aware of the advantage we have when conducting business with other Norwegian companies. Large international companies with many offices around the world cannot reach the level of influence and knowledge in Norway compared to a local Norwegian company like us – which has 90 percent of its activity based here.

In the end, our goal is to provide a better service to the customer, with technical support and we feel that our Norwegian presence gives that ability. We can even assist the client by improving his design, and providing our in-house technical documentation.

Given that Norway is a high cost market – High offshore worker salaries, drilling costs on the NCS – what is your strategy for building profit margins in this country when the margins are being squeezed?

Primarily our products are mainly produced in low cost countries and our strong agreements with steel mills allow us to be very competitive in terms of price. By establishing contracts directly with the producer, we substantially reduce costs, and we improve quality control. All the steel mills we have partnered with qualify with the same specifications as ours – steel mills are NS1 approved facilities. Part of our strategy to maintain costs low is to rely on foreign partners, mainly in China or Ukraine where our products are made.

Compared to the UK, our imported products do not bear any taxes. This import strategy maintains our costs low and we certify all of our customers with the highest level of quality since of all of our products are NS1 certified.

With the latest advances of drill pipes and drill stem designs, ultra-deep water and deep water projects represent a high source of market potential for the OFS companies providing the right technology and equipment. What are your perspectives on Norway’s Ultra-Deep water market? What about in other markets?

Ultra-deep water projects are strong in Norway. Over the years we have built special connections with many customers, and sold large quantities of drill pipes for these projects. With more semi-submersible rigs adapted for deep-water drilling coming to Norway, we see an opportunity to increase our products’ sales.

As the standards are higher in Norway than in other countries, we realize the potential our drill pipes have in respecting high quality standards. NS1 standards were specifically adapted to provide the customer with the highest Norwegian quality.

Indeed, the ultra-deep-water market is strong in Norway, and although we concentrate most of our activity on the NCS, we have been looking at other countries such as Brazil that need similar products we provide here. Although we have been conducting a survey in Brazil, we have encountered difficulties in establishing a strong footprint in this market. Some Brazilian clients have accepted our services, but the level of equipment we provide them with is very small compared to our local operations here.

In defining your role as a local Norwegian company, what experience do you offer in Norway compared to other companies (foreign) which defines your success as an OFS company?

Oil and gas players need a constant support from companies who provide the right service and equipment at all times like us. As a small organization, Dahl Oilfield Services delivers an on-going service for both rig contractors and operators. Our local support, with technical assistance, allows us to immediately assist a client experiencing problems offshore. Our local presence represents our main strength and our partners rely on instant response.

In order to control quality, maintain resources and save time, large companies have trusted single suppliers. In fact, one supplier providing a broad series of services has proven to be a better option in many cases, and this is how we have grown over the years.

Given the high global demand for offshore drilling and the accelerating race to the North, how do you see Dahl’s Oilfield Services role of providing drilling equipment over the coming 5-10 years?

In the past we used to focus only on drill collars. Today, we have widened our services and we sell a wide range of drill string components. Our objective is to be the best supplier of drill string components in Norway. To pursue this goal we have developed pipe packages to our customers.

As rig companies suffer from a lack of technical knowledge on drill string components, we know that not only our products are required, but our services and expertise as well. Therefore we are not a simple product provider but a solution provider.

Our main opportunity within the NCS lies in the amount of new comers arriving to Norway. These customers will require both our products and expertise. As long as we keep investing in our drill string components, and remain a trusted partner on the NCS, our business will grow. Last year our turnover was around $5 million with a 10 percent growth.

In the past we were only focusing on a small number of clients, whereas today we work with a much larger number of clients. We are confident in Norway’s potential, and we will concentrate our energy in this market where our solutions are appreciated.

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