Smith Unit Gains Contract With China

Smith International Inc.’s Dyna-Drill division Wednesday announced a $9-million, long-term oil field equipment, training and technology contract with the China Oil & Gas Exploration and Development Corp.

The contract is the largest deal ever arranged with the Chinese for this type of oil field equipment, according to Stan Luker, president of Irvine-based Dyna-Drill, which makes drilling equipment for oil and gas wells. He said the contract is worth a minimum of $9 million, to be received over the next 30 months.

Oil services industry analysts said doing business with China is a smart move for companies like Smith that are suffering losses stemming from a slump in domestic oil and gas drilling.

Oil field equipment companies have watched their profits plummet in the wake of depressed oil and gas prices and a resulting surplus of oil and gas drilling equipment. Dyna-Drill’s parent company, Smith International of Newport Beach, lost $10.3 million on revenues of $175 million for the first quarter of 1985, compared to net income of $3.3 million on revenues of $172 million for the same period a year ago.

Dyna-Drill’s contract calls for the company to provide equipment, parts and technical training for the operation, manufacture, maintenance and repair in China of in-the-well motors used to drive oil and gas drilling bits.

Over the next five years, Dyna-Drill will also provide technical advisers to design and equip three manufacturing facilities in Beijing, the Hubai province and the Dagang area, China’s largest oil field. The contract also includes a training exchange involving 9,600 hours of instruction in Irvine and 3,360 hours of training in China.

Luker said discussions with China’s Petroleum Ministry began last December. The final agreement was signed last week.

Smith International has conducted business with China periodically since 1978. From 1978 to 1980, Luker served as vice president of Smith Dasing Ltd., a trading company set up by Smith to represent the interests of oil services firms in China. In 1983, Smith’s McEvoy division in Houston signed an agreement to provide technical training in the manufacture of drilling rig equipment.