TSC wins RMB90M rig equipment contract for Lanzhou LS Petroleum Equipment Engineering Co. Ltd (LSPE)

TSC recently won a contract worth approximately RMB90 million (US$14.7 million) with Lanzhou LS Petroleum Equipment Engineering Co. Ltd (LSPE) to provide solids control systems and electrical control systems for LSPE land rigs.

LSPE is a wholly-owned subsidiary of the Lanshi Group and is considered one of China’s largest manufacturers of equipment for oil drilling, refining and chemical processing. Up to 3 April 2013, LSPE was known as, Lanzhou-LS National Oilwell Petroleum Engineering Co., Ltd before it changed its name to LSPE. The Lanshi Group has established itself as a reputable manufacturer of high quality equipment using advanced production technology and management concepts from the United States of America. The Lanshi Group is also able to manufacture a variety of land-based oil rigs, and offshore drilling modules capable of operating in various water depths.

The Lanshi Group recently entered into a long term strategic agreement with TSC where both parties combine their strategies and competitive strengths to their mutual benefits on a win-win principle. The Lanshi Group will benefit from TSC’s strong global network to further expand the global land rig market by providing a variety of land rig drilling equipment. TSC, on the other hand, will benefit significantly from the world class manufacturing facilities which the Lanshi Group has, to meet with growing demand for TSC’s own products.  The parties agree to negotiate terms of trade on an arms-length basis in good faith on the best commercial terms available in the market and to combine the competitive strengths and strategies of both parties in a joint effort to pursue a greater market share for the respective businesses of each party to the Strategic Agreement.

Global oil demand is expected to increase 1.1% this year (Source: The US Energy Information Administration) to a level exceeding one million barrels a day. As oil prices sustains at around US$100 per barrel, global drilling activity will increase and will therefore also lead to the increase in demand for drilling services and components.

TSC is one of a few companies in China capable of providing high quality solid control and electrical control systems for all rig types. TSC’s brand of solid control and electrical control system have a number of unique design features such as digital control systems for generator set, power efficiency management system, flexible motor control configuration, variable frequency drive system to maximize drilling power and PLC controls for drilling operations. These features significantly increases drilling process efficiency. TSC has since supplied over 200 units of such control systems in more than 20 countries including the major oil-producing countries such as Russia, USA, Middle East and South America.

This award of a RMB90 million order for solids control and electrical control equipment testifies well to the intention of the long term strategic agreement which is based on a strong relationship between TSC and the Lanshi Group. This contract will lead to increase in TSC’s market share within the Chinese rig equipment market.  The strategic alliance will also make available manufacturing facilities that will enable TSC and the Lanshi Group to reach the growing demand for marine equipment market, as well as helping to expand both parties’ market influence globally.

About TSC Group
Listed on the Main Board of the Stock Exchange of Hong Kong, TSC Group is an international product and service provider specializing in the onshore and offshore oil and gas drilling industry. The Company is principally engaged in the provision of rig products and technology and turnkey solutions for both new builds and rig upgrades.

About Lanzhou Lanshi Group Limited (Lanshi Group)
Lanshi Group, (former Lanzhou Petrochemical Machinery Works) was founded in 1953 as the national machinery base for petrochemical industry of China. It has over 60 years of development history and today has 25 subsidiaries and employs more than 6,000 employees. The Lanshi Group is not only known in oilfield and petrochemical industries but has also developed businesses in many other fields like international engineering and trading services, real estate, new renewable energy and other industries. The Lanshi Group has the sound and reliable quality systems (ISO9000/ ISO14000/ISO18000, API, ASME, NBBI, etc) which are approved internationally.

About Lanzhou LS Petroleum Equipment Engineering Co., Ltd (LSPE)
Lanzhou LS Petroleum Equipment Engineering Co., Ltd (LSPE) was renamed from Lanzhou LS-National Oilwell Petroleum Engineering Co., Ltd. on April 3, 2013. The scope of business is to design, development and manufacture of complete land and offshore drilling rigs, workover rigs, and to provide equipment packages, components, fittings, parts as well as full services. LSPE main products are a series of electrical, mechanical or electrical-mechanical compound driven drilling rigs for different applications such as conventional land drilling, shallow water, offshore and desert.