Manufacturing

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 Manufacturing Goals

• Conform to design (always)

• Sustain Controlled and highly repeatable processes

• Deliver bits on-time

• Deliver products at the lowest possible cost

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 The Big Picture

• We manufacture in Houston primarily for western hemisphere markets,

which are rental.

• We repair products in Carrollton and a small amount in Houston and

Canada.

• We manufacture in Tarbes France, primarily for eastern hemisphere (sale)

markets.

• PDC has a CAGR of more than 50% and we are currently using ~ 60% of
our manufacturing capacity.

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 Base Materials

• Graphite – A naturally occurring mineral that extruded into “bars” provides

an ideal thermo-chemistry for high temperature molds.

• Low Carbon Steel (Blank) – Typically a steel such as 1020 used as a core
to form the bit casting around.

• Tungsten Carbide – Formed thru the combination of tungsten and carbon

this “powdered metal” is used to form the drill bit casting.

• Binder Alloy – Due to the extremely high melt point of the tungsten
carbide (6,192 f) this copper based alloy will melt and bond the tungsten
carbide particles together and to the steel core at approximately 2150
degrees F.

• PDC Cutters (Polycrystalline Diamond Compact) - Is a synthesized,

extremely tough, intergrown mass of randomly orientated diamond particles
in a metal matrix.

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 Base Materials cont’d

• Braze Alloy – A silver based brazing alloy used to join the PDC cutter to
the matrix bit head. This material is selected as the highest strength alloy
available which works at a temperature below the thermal degradation point
of a PDC cutter (~1300 degrees f).

• High Carbon Steel (Upper Section) – As the connection to the drill string;
this 35-40 point carbon steel is selected for strength, toughness and weld
ability.

• Weld Alloy – Selected to join the upper section to the casting (blank), this
weld alloy has a strength greater than the upper section.

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 What do we do?

• At the “core” of our technology is creation of a tungsten carbide casting

(matrix).

• The matrix casting is made to exact engineering specifications.

• The casting carries the PDC cutter and protects against erosion.

• This technology is “unique” to the drill bit business.

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 Significant Manufacturing Milestones

1) Mold turning and 5-axis milling

2) Mold assembly
3) Load and infiltrate SP
4) Braze SP
5) Machine
6) Weld SP
7) Tip-Grind
8) Final and paint

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 A special process is any production process that generates outputs that cannot
be measured, monitored, or verified until it's too late.
SP
It's often too late because deficiencies may not be obvious
until after the products have been used.

In PDC Bit Manufacturing the following are Special Processes;

1) Infiltration – The formation of our casting is technically a “pressure
casting”.
2) Brazing – Is used to attach the sintered carbide backing of the PDC
cutter to the cast matrix bit head.
3) Submerged Arc Welding – Is the method used to attach the drill bit
casting (via the blank) to the upper section.

While x-ray, ultrasonics and other means have been tested for inspection, destructive
testing is the only definitive method.

In order to prevent output deficiencies, these special processes must be validated in

order to prove that they can generate planned results.

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 Mold turning and 5-axis Milling

5-axis Milling
Sawing

Turning

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 Mold Assembly

As machined

Finished Mold

Assembly

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 Blade and Cutter Identification

• Blade = Clock Wise (looking down on bit)

• Cutter = Inside to outside

B7C2 B?C?

Carbide Insert on front

of blade-1.

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 Load
Binder Alloy
Loading Powder

Center Stalk

Steel Core (Blank) Steel Core (Blank)

Powdered Metal
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 Infiltrate
Hot Hat

SP

Quench Table
Bit at 2150 degrees F

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 Breakout

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 Pocket Fit
SP
Braze Braze Operation

Braze Pre-Heat

Flux & Fiber Blanket

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 Machine & Weld SP

Service Thread

Submerged Arc Welding

Upper Section (shank)

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 Tip-Grind
Ring Gage to Spec

Tip-grindProprietary
at Gage
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to Varel & Cutter
International
 Final & Paint

Final Inspection

Final Grinding

Paint
Fluorescent Dye Application

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 Box and Ship

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 Repair

• US & Canada are primarily a rental market

• Varel owns the drill bit as an income asset

• Managing the asset means:

» Bit Selection
» Bit Application
» Repair
» Financial performance

• As required repair consist of:

» Cutter rotation
» Cutter replacement
» Matrix rebuilding
» Upper Section replacement

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 Bit Repair Steps

Evaluate Get approval

Final, Paint
Clean & Prep
and Ship

Tip-Grind Issue Cutters

Repair matrix
Heat
and cutters

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 Clean & Evaluate

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 Issue Cutters and Repair

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