Now that the merger of Varco International and Tuboscope Inc. has closed, chairman and chief executive George Boyadjieff and team can take the steps necessary to create the benefits they see from the deal. Those steps will not include many layoffs, but will involve using the Internet to share "smart-well" technology with customers. Boyadjieff explains, "This merger of equals is not being done to eliminate overlapping services, because there are few. There are synergies, however. Varco is a products company with automated and 'smart' products, and Tuboscope is a service company, offering things such as solids control and inspections. So, we are marrying the two to work in a unique way. "For example, in deep water, Tuboscope has coiled-tubing technologies and Varco Shaffer has deepwater blowout-preventer technology, so we can operate on the ocean floor to do a well intervention during production or workovers. This hasn't been done before." Varco plans to connect its technologies with customers through the Internet to monitor performance, benchmark against best practices and offer customers ideas if their wells aren't performing as expected. The goal is to provide higher quality service from a central service center such as Houston, and do so with fewer people. "The e-commerce world is exciting," Boyadjieff says. "We are not going to start a dot-com business per se, but we'll connect our knowledge with our customers. We want to be directly connected to them and not go through anyone in the middle." The majority of Varco's vendors and suppliers are already connected to the company electronically and it does most of its purchasing through the Internet. "It's done wonders for improving our inventory turns and saving us money." "Our biggest challenge is to show shareholders that we can grow into something bigger than if the two companies had remained separate." The new Varco had pro forma revenue of about $1 billion in 1999. It is still based in Orange, Calif., but maintains major offices in Houston as well. It offers equipment and services on land and offshore from initial drilling through remediation of old wells.
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