Friday, October 1, 2004
Offshore Notebook: Change is in the Wind
Offshore-support companies are shaking up their operations as they struggle to prosper in baffling markets.
Offshore-support companies are shaking up their operations as they struggle to prosper in baffling markets. Record high oil prices and warnings of natural gas shortages have not necessarily translated into more business for the helicopter operators.
Houston-based Rowan Co. is six months into a review of whether it should sell its Era aviation unit, with its board of directors asking management in April to assess the 50-year-old aviation company's marketplace value.
With the evaluation in hand, "The board will determine if Era is a core business to us or if we want to sell it," said Bob Croyle, Rowan's vice chairman and chief administrative officer. He said a key question is, "Should we be in the aviation business?"
The review should be completed within a few months. "We want to reach a decision on the matter fairly quickly." Rowan officials said the company has received several proposals to buy Era.
Era provides fixed-wing and helicopter services around the world with a fleet of about 85 helicopters and 16 fixed-wing aircraft. Its helicopter division operates out of Louisiana and Nevada, primarily for oil and gas companies. It also operates flight-seeing tours in southeast Alaska.
Era's operations lost nearly $14.4 million in the first half of this year, according to Rowan, compared to a loss of $5.1 million in the same period last year. Much of that was chalked up to a seasonal slowdown in helicopter flying in Alaska.
As a whole, Rowan reported a first-half operating loss of $964,000, compared to a loss of $17.1 million for the first half of 2003. Drilling operations turned around from a $12-million loss on the second quarter of 2003 to an $11-million profit for that quarter this year. Manufacturing racked up a $2.4-million gain in that quarter compared to a nearly $300,000 loss for the same period in 2003.
Another major company, Bristow Aviation Holdings, has changed senior management. The Offshore Logistics Inc. unit said its managing director, Keith Chanter, has left that company to pursue other interests.
Chanter joined the company in 1997 and was promoted to managing director two years later. He presided over what the company called a successful restructuring of its North Sea operations that enabled Bristow "to remain a leading competitor in that market." He reportedly will continue in a consulting and advisory capacity to assist in the transition.
Allan Brown, who most recently served as international commercial director for Bristow, has been appointed to succeed Chanter as interim managing director.
Offshore Logistics Inc. provides helicopter transportation services to the oil and gas industry in Africa, the Far East, the Gulf of Mexico, the North Sea, South America, Alaska, Australia, Egypt and Mexico.
One company that says it is prospering is OMNI Energy Services. In mid-August, the Carencro, La.-based company split its operations into three business units--Aviation Transportation Services, Environmental Services and Geophysical Support Services. At the same time, it promoted CFO G. Darcy Klug to the new position of executive vice president. OMNI CEO James C. Eckert said the reorganization "is essential to the evolution of OMNI and its management team." Noting the company's revenues have quadrupled since 2000, he said "strategic changes are necessary to meet the demands of this growth."
The move came as OMNI is acquiring a second Sikorsky Aircraft S-76 to transport passengers in the Gulf of Mexico. The aircraft is set for delivery this quarter, joining the first in operating from OMNI's bases in Texas and Louisiana. The revenue stream from the S-76 service has produced "impressive profit margins," Eckert said.
He said the company's primary focus will remain in the shallow waters of the Gulf of Mexico. But the combination of the S-76s with OMNI's fleet of Bell Helicopter 407's now lets the company meet "the `deep water, Gulf of Mexico' demands of our customers." OMNI operates a fleet of 29 helicopters.
Sikorsky is making headway in offshore markets. In September, the U.S. Export-Import Bank said it would finance the sale of 10 S-76C+ aircraft and spares to Brazil's Lider Taxi Aereo. The bank is providing nearly $60 million in financing to the operator's parent company.
Lider Taxi, based in Belo Horizonte, Brazil, is a leading provider of offshore helicopter services, and the new helicopters will help it fulfill five-year contracts with Petrobras and other customers to support offshore oil and gas exploration. Lider Taxi also plans to use the S-76s for passenger and cargo flights within Brazil.
The financing, in the form of a direct loan to the parent Lider Group, "will further Sikorsky's market share in Brazil and lead to follow-on opportunities for the company in the offshore oil services industry," Ex-Im Bank's Chairman Philip Merrill said in a prepared statement.
Meanwhile, CHC Helicopter Corp. has won two North Sea contract renewals worth about $14.5 million a year. PGS Production was awarded a two-year contract renewal with two one-year options for offshore crew-change services using CHC's fleet of Super Pumas based in Stavanger, Norway. Kerr-McGee gave the company a one-year contract renewal with two one-year options for a Eurocopter Super Puma Mark 2 based in Aberdeen, Scotland.