be performed in-house. The Company’s primary raw material is cast steel ingots, from which it produces steel shaped forgings at its forging and heat treatment facility in Houston, Texas. The Company routinely purchases steel ingots from multiple suppliers on a purchase order basis and does not have any long-term supply contracts. The Company’s Houston facility provides forgings and heat treatment for its Houston, Aberdeen, Singapore and Macae facilities. The Company’s major competitors depend on outside sources for all or a substantial portion of their forging and heat treatment requirements. The Company has made significant capital investments in developing its vertically integrated manufacturing capability. Prolonged periods of low demand in the market for offshore drilling and production equipment could have a greater effect on the Company than on certain of its competitors that have not made such large capital investments in their facilities. 

Dril-Quip’s manufacturing facilities utilize state-of-the-art computer numerically controlled (“CNC”) machine tools and equipment, which contribute to the Company’s product quality and timely delivery. The Company has also developed a cost effective, in-house machine tool rebuild capability which produces “like new” machine upgrades with customized features to enhance the economic manufacture of its specialized products. The Company purchases quality used machine tools as they become available and stores them at its facilities to be rebuilt and upgraded as the need arises. Rebuilding used machine tools allows for greater customization suitable for manufacturing Dril-Quip proprietary product lines. This strategy provides the added advantage of in-house expertise for repairs and maintenance of these machines. A significant portion of the Company’s manufacturing capacity growth has been through the rebuild/upgrade of quality used machine tools, including the replacement of outdated control systems with state-of-the-art CNC controls. 

## Customers 

The Company’s principal customers are major integrated, large independent and foreign national oil and gas companies. Offshore drilling contractors and engineering and construction companies also represent a portion of the Company’s customer base. The Company’s customers are generally oil and gas companies that are well- known participants in offshore exploration and production. 

The Company is not dependent on any one customer or group of customers. In 2014, the Company’s top 15 customers represented approximately 61% of total revenues and Chevron and related companies accounted for approximately 10% of total revenues. In 2013 the Company’s top 15 customers represented approximately 64% of total revenues and Petroleo Brasileiro S.A. (“Petrobras”) accounted for approximately 11% of the Company’s total revenues. In 2012, the Company’s top 15 customers represented approximately 62% of total revenues and Petrobras accounted for approximately 12% of the Company’s total revenues. No other customer accounted for more than 10% of the Company’s total revenues in 2014, 2013 or 2012. The number and variety of the Company’s products required in a given year by any one customer depends upon the amount of that customer’s capital expenditure budget devoted to offshore exploration and production and on the results of competitive bids for major projects. Consequently, a customer that accounts for a significant portion of revenues in one fiscal year may represent an immaterial portion of revenues in subsequent years. While the Company is not dependent on any one customer or group of customers, the loss of one or more of its significant customers could, at least on a short-term basis, have an adverse effect on the Company’s results of operations. 

## Backlog 

Backlog consists of firm customer orders of Dril-Quip products for which a purchase order or signed contract has been received, satisfactory credit or financing arrangements exist and delivery is scheduled. Historically, the Company’s revenues for a specific period have not been directly related to its backlog as stated at a particular point in time. The Company’s product backlog was approximately $1.2 billion at both December 31, 2014 and 2013 and $881 million at December 31, 2012. The backlog at the end of 2014 and 2013 represents an increase of approximately $319 million, or 36%, from the end of 2012. 

The Company expects to fill approximately 60% to 65% of the December 31, 2014 product backlog by December 31, 2015. The remaining backlog at December 31, 2014 consists of longer-term projects which are 

