) has announced that its Alcoa Oil and Gas Division has set up a
1800 meters (5,905 feet) long Aluminum Alloy Drill Pipe (AADP) in
the Iron Duke Well C offshore Seria, Brunei. The company has
collaborated with Brunei Shell Petroleum Co. ("BSP") and AMRTUR
Corp. on the project.
The Iron Duke Well is considered to be the most complicated
amongst those operated by BSP as it has deviations in the form of
three "S" shaped curves and a big horizontal section measuring
5,000 metres. The well was drilled up to 7,485 meters in about 60
meters (197 feet) of water.
Earlier, high cantilever loading, high torque, high drag, high
sideforce, and casing wear concerns were the main hindrances faced
by BSP. Alcoa's light aluminum alloy pipes were identified as means
to tackle these problems and also help maximizing recovery and
The Aluminum Alloy Drill Pipe is about 40% lighter than steel
pipes and has the potential to significantly reduce drill string
hook load. The tube uses a proprietary thermal connection
technology that allows steel tool joints to be attached to the
aluminum pipe body. The tubes are produced at Alcoa's Lafayette,
Indiana, facility and the finished drill pipes are assembled at its
Oil & Gas facility in Houston, Texas.
BSP is planning to deploy AADP on other wells in Brunei and is
also planning a drilling project using AADP in New Zealand.
Alcoa is a leading producer of primary and fabricated aluminum
as well as the world's largest miner of bauxite and refiner of
alumina. The company reported a loss of $2 million (break-even on a
per-share basis) in the second quarter of 2012 compared with a
profit of $322 million (or 28 cents a share) in the year-ago
quarter. The year-over-year decline was due to lower aluminum
Excluding one-time special items (including restructuring and
other charges, litigation expenses and tax-related items), Alcoa
earned 6 cents a share in the quarter, in line with the Zacks
Consensus Estimate and lower than the year-ago earnings of 32
Revenues decreased 9.4% year over year to $5,963 million, but
were ahead of the Zacks Consensus Estimate of $5,828 million. While
weak aluminum prices dragged down revenues, the company witnessed
increased demand across aerospace and automotive markets in the
quarter. Aluminum prices dropped 18% year over year and 4%
sequentially in the second quarter.
Alcoa witnessed strong performances across all its businesses
during the quarter, driven by higher utilization rates, process
innovations, lower scrap rates and usage reductions. The company
expects higher demand for aluminum from automobile, aerospace,
packaging and commercial transportation end markets in the near
Alcoa competes with
Aluminum Corporation of China Limited (
). The stock maintains a Zacks #4 Rank, which translates into a
short-term (1 to 3 months) Sell rating. We currently have a
long-term Neutral recommendation on Alcoa.
ALCOA INC (AA): Free Stock Analysis Report
ALUMINUM CP-ADR (ACH): Free Stock Analysis
RIO TINTO-ADR (RIO): Free Stock Analysis Report
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