RTI INTERNATIONAL METALS Company lands oil-rig contract

THE VINDICATOR, YOUNGSTOWN
This $6 million deal should lead to more oil rig work, a company official says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
WEATHERSFIELD -- The parent company of RMI Titanium said it has landed a significant deal as it tries to expand its oil exploration business.
Atlanta Offshore Limited has awarded a $6 million contract to RTI Energy Systems, a sister company of RMI, to design and produce the underwater structure of a new oil rig to be built in the Gulf of Mexico.
RTI International Metals, the Weathersfield-based parent company of RMI and RTI Energy Systems, has been working to expand the use of titanium in deep-sea drilling in recent years.
Titanium for RTI's oil rig structures is produced by RMI Titanium's plant in Weathersfield, which employs about 520, said Larry Jacobs, RTI chief financial officer.
He said the deal with Atlanta Offshore Limited isn't RTI's largest drilling contract, but it should lead to a series of other deals as this drilling project expands.
"In terms of future business, this is key,'' he said.
Titanium's strength: To this point, RTI's deep-sea projects have been single rigs. Jacobs said the company has been trying to prove to the oil industry that titanium is the best material for future drilling, which will be more difficult.
The oil that's left is in deeper seas and harder to reach, Jacobs said. RTI officials have been touting titanium as better than steel in reaching these areas because of its strength and light weight.
Jacobs said RTI Energy Systems can design structures that are able to withstand the extreme tension created by the deep-water currents.
The contract with Atlanta Offshore Limited is for the first well to be drilled in the Matterhorn Project, a large oil field that is about to be developed. Rigzone.com, a Web site that serves the oil industry, said the initial well is to be drilled 2,790 feet under water. Production is expected to start in the second half of 2003, the site said.
Future: Jacobs said RTI now is in line to get more contracts as more wells in the field are drilled. If it hadn't landed a contract for the first well, it would have been unlikely to gain other work in the project, he said.
Future wells will require even more advanced engineering because they will be in deeper water, he said.
Jacobs said there are other large oil fields that RTI expects to be started soon as well. Oil companies have been planning these fields for the past 12 to 18 months and it appears now they are ready to go forward, he said.
Jacobs said he couldn't say how much revenue RTI expects from future energy exploration contracts.
The company had sales of $243 million last year and generally has about 70 percent of its revenue from aerospace contracts. It is looking to boost sales in energy exploration as a buffer against the ups and downs in the aerospace industry.
shilling@vindy.com