Dril-Quip, Inc. (DRQ) manufactures highly engineered offshore drilling and production equipment for deepwater, severe-service applications, and harsh environmental conditions. The company designs and manufactures subsea and surface wellheads, subsea and surface production trees, mudline hanger systems, specialty connectors and associated pipe, drilling and production riser systems, wellhead connectors and diverters, which are used on offshore rig equipment. The company's products are used by major integrated, large independent and foreign national oil and gas companies in offshore areas throughout the world. Dril-Quip also provides installation and reconditioning services and rents tools for use in the installation and retrieval of its products.
Dril-Quip operates in two segments Product Group and Services Group. During the first nine months of 2007, the Product Group generated roughly 84% of the company's total revenue through equipment sales to independent and major exploration and production (E&P) companies and offshore drilling contractors. The Services Group (16%) provides field installation, product reconditioning, and rentals of running tools for installation and product retrieval. Service revenue generally correlates to revenue from product sales because increased product sales generate increased revenue from installation services and rental running tools.
Dril-Quip's manufacturing operations are vertically integrated, with the company performing forging, heat treatment, machining, fabrication, inspection, assembly, and testing at its own facilities. Geographically, the company divides its operations into three segments Western Hemisphere (approximately 48% of the total revenue in the first nine months of 2007 came from this segment), Eastern Hemisphere (37%), and the Asia-Pacific (15%).