Monday, August 1, 2005
Good News, and a Probe
OFFSHORE OPERATORS, AT LEAST the big ones, seem to be riding high. They are introducing new aircraft like the S-92 and AB139 and expressing their intention to hold on to the older aircraft the new ones originally were intended to replace. The reason: they say they can't afford to release the older aircraft from their fleets, given the crush of business they're expecting.
The situation isn't hurt by the fact that oil is staying close to or above $60 a barrel, with some analysts projecting it will hit $70.
Some recent indications of the bright prospects include Petroleum Helicopters, Inc. netting nearly $115 million in a mid-June public stock sale intended to underwrite a fleet expansion and CHC Helicopter's posting in late June the financial results for what it said was its best fiscal year ever, excluding restructuring and tax costs.
On June 14, PHI sold about 4.25 million shares of non-voting common stock for $25 a share. About two weeks later, the company issued 637,500 additional shares of non-voting common stock at $25 a share to cover options exercised by the underwriters of the sale--UBS Investment Bank, Lehman Brothers, Inc., Howard Weil Inc. and Simmons and Co. International. After expenses, PHI netted about $114 million.
The Lafayette, La.-based company said it "intends to use substantially all of the net proceeds of this offering toward the expansion of its aircraft fleet."
CHC also is planning to expand its fleet. In a June 30 teleconference with stock analysts and reporters, CEO Sylvain Allard said CHC's activity "is continuing to increase with several requests for bids to support and existing oil and gas projects.
"We're also looking at extensive fleet replacement programs in Nigeria, Brazil and in India," he said, and expecting the growth in its operations to continue through late 2006.
But the company doesn't have enough aircraft to support all that demand. CHC added 17 helicopters to its fleet since mid-2004--15 medium-lift and two heavy aircraft, but Allard said, "All these aircraft are fully deployed."
The company's chief financial officer, Jo Mark Zurel, said CHC is working with Bell, Eurocopter and Sikorsky to determine how quickly it can get new aircraft, how many it can get and at what price. "Depending how those negotiations work out," Zurel said, "we may buy more or less from the different manufacturers."
CHC has helicopters operating in more than 30 countries provides offshore support services. In the teleconference, company officials said its most recent fiscal year, which ended April 30, marked its best year and best fourth quarter, setting aside restructuring and tax costs.
The company reported revenue for the fourth quarter of Canadian $226.4 million, a $17-million, or 8.1-percent, increase from the same quarter in its fiscal 2004. That increase was driven primarily by a 61.4-percent jump in the company's repair and overhaul business and a 17.3-percent rise in international flying. Net earnings, however, fell nearly 26 percent, from $25.4 million to $18.8 million.
CHC's revenue for the full year jumped more than 25 percent, from $720 million to $903.3 million. Net earnings dropped slightly, from $63.7 million to $62.6 million.
CHC continues to work on a restructuring that in the last year saw its head office and senior management moved from St. John's, Newfoundland to Vancouver, British Columbia, voluntary retirements and layoffs and the creation of the Heli-One independent helicopter support company.
Meanwhile in the Gulf of Mexico, federal prosecutors are investigating whether the conduct of three of the largest offshore-support operators may have violated anti-trust laws.
Offshore Logistics, PHI and Seacor Holdings reported in late June filings with the U.S. Security and Exchange Commission that they had received subpoenas for documents from the anti-trust division of the U.S. Justice Dept.
In nearly identical language, Lafayette, La.-based Offshore Logistics, PHI and Houston-based Seacor said the subpoenas related "to a grand jury investigation of potential antitrust violations among providers of helicopter transportation services in the Gulf of Mexico."
They added that they believe the subpoenas are "part of a broader industry inquiry and that other providers also have received such a subpoena." All said they would cooperate fully with the probe and turn over all requested documents.
PHI added that it "had no knowledge of the investigation prior to receiving the subpoena" on June 15. That was a day after it cleared $99 million in the public stock sale.
Offshore Logistics' Air Logistics provides offshore transportation support services in the Gulf. It calls itself the world's largest provider of helicopter transportation to the oil and gas industry. Its other units include Air Logistics of Alaska and Bristow Helicopters, which operates mainly in the North Sea and Europe.
Both AirLog and Bristow have significant operations outside their home region, which are conducted under Offshore Logistics' International division.
According to PHI, it transports more than 1 million passengers from bases throughout the GoMex region.
Seacor in January purchased Era Aviation Seacor from Rowan Cos. for $118 million, adding to its aviation portfolio of Tex-Air Helicopters. The plan is to have the aviation units operate under the Era name.