I recently had the chance to speak with a couple of key players in the drill bit supply industry, and I asked them for a brief update on market conditions.
Checking in from Benton, Ill., Eli Cox of KS Bit Inc.’s sales team, tells us that top oilfield-quality rerun bits are moving the fastest. Who’s buying them? “Oil drillers and water well drillers who are looking to get some better life out of their bits,” Cox responds. “That’s part of how our company has grown over the past 25-plus years. Kenny Sentel (KS Bit’s owner) has really grown the business by offering good reruns instead of junkers. He’s always made sure that our reruns are top-quality.”
Asked where his firm procures its bits, Cox reports, “We get a lot of bits from oil drillers who will only run their bits for so long, and then they pull them out before anything might happen to them. We get those bits while they’re still in good shape, refurbish them and turn them into good, quality reruns to sell.” As far as what size bits driller customers are looking for, he says, “That just depends on where they are and what kind of formations they’re drilling. People ask for 37⁄8-inch bits and 22-inch bits and every size in between. We have more than 15,000 bits in stock, so we’re able to accommodate most any request.
“When customers call us looking for a bit, I’ll ask them what kind of quality they are looking for. Of course, everybody wants the top-quality bit for the low-quality price, but we do everything we can to get them what’s best for their needs. Prices, of course, have gone up. If a bit was $140 not too long ago, it’s gone up $20 or $30; if it was a $2,000 bit, it’s probably gone up $100 or $200. You can find some companies that really have to stay at a low price to keep on selling, but we strive to keep our prices competitive, while maintaining a high level of quality. We ask the drillers what types of drilling they’re doing and what types of formations they’re dealing with, and we provide the bit that best fits those situations. We have to make sure at our end that it’s a good bit. We’ve got guys here who have been working with drill bits for many, many years; they can look at a bit and feel it and turn the cones and tell what type of quality it is and give it a ranking.”
Looking ahead, Cox sees a couple factors that KS Bit will be monitoring closely. “The mining industry is starting to pick back up again,” he says. “And the PDC bits have moved into the industry rather quickly, and that looks to be a strong market, so we’re keeping a close eye on that.”
At Bit Brokers International in Logan, Ill., founder Tim Thomas tells us, “We’ve been selling a lot of new bits vs. used bits these days. We’re probably at about 50:50 right now, whereas it used to be we were lucky to do 25-percent new. The supply for the new stuff is better today and the prices are a little better. And the used products, because of the PDC market, you just don’t have a good supply of tricones. The PDC bits – that’s where things are going. The oilfield people have been using them since the 1960s. But that’s all high-dollar stuff. We’re in the process now of building some PDC bits that will be more economical for the smaller mom-and-pop-type companies. Before, if you weren’t Exxon or Shell, you couldn’t afford those things. So that’s changing. My goal is to get that cost down to where everybody can benefit from those PDC bits.”
The overall quality of bits has improved greatly, though. The suppliers have done their homework and vetted all these manufacturers, and are able to deliver products that end-users can count on to meet their needs. Thomas expounds, “At the high end, the industry-leading manufacturers have the high-priced products – mostly for the deep-hole oil wells. But on the other end, you’ve got other – often foreign – manufacturers that are starting to produce better bits now. That’s closing the gap some between the price of a used bit and the price of a foreign new bit. With the PDCs in the oilfields, we’ve lost supply. So we’ve made some adjustments, and we’re offering new imports to compensate for that loss of supply of the used bits.”
Regarding the bad rap that clouds the foreign hammer and bit makers, Thomas explains, “There are a lot of manufacturers out there in the world – some good ones and a lot of bad ones. In the last 10 years or so, we’re experimented with all of them, and we’ve got it down as to what’s good and what isn’t. It’s a learning experience, and an expensive one. Just because it’s made in China or Russia or India or Poland or wherever doesn’t necessarily make it a bad bit. It’s the individual manufacturers that make them good or bad. The individual manufacturer is the main key, but just like anything else, there can be good and bad within a man-ufacturer. Take Ford, for example – the Taurus may run excellent, but the Pinto is something to stay away from. In particular bit sizes, different manufacturers have advantages over others. We definitely went through a learning stage, but we’re past that now,” he says happily. “Price is not the factor that it used to be. It is a factor – don’t get me wrong, but people have learned the lesson about buying the cheap stuff. But that’s that learning curve we go through. As is often the case, you get what you pay for.”