Managing A Successful Entrance into Mexican Drilling
STORY INLINE POST
Q: What incentives and projects drew your attention to Mexico?
A: Mexico fulfilled three important criteria for a company like ours: work was available, it was profitable and we had boots on the ground, meaning we had personnel available in the area. In Mexico, we could contribute significant value to many companies through our onshore drilling services and our broader oil field services operations. It was evident that we needed to be here.
Q: What were the most crucial challenges and questions that Icon Drilling faced when arriving in Mexico?
A: One of the main challenges of working in Mexico has been waiting on PEMEX. But perhaps that is an unfair assessment. I have had the privilege of working in a large number of countries and one of the lessons I have learned throughout my career is to hold off on your initial judgements of any company. With that being said, you always have to adapt to the ways in which all NOCs are run when compared to IOCs or other types of operating entities in this industry. You have to adapt to the individual corporate culture and bureaucratic structure of each new NOC that you work with. In that sense. PEMEX is no worse or better than any other NOC across the world. I have seen trends that I see in PEMEX reflected in Saudi Aramco and other Middle Eastern NOCs. In essence, you get used to understanding the value of patience. Time frames are simply a different type of ballgame for NOCs. While we are still awaiting their final say on many things, what keeps us going are the many opportunities that PEMEX presents to a company like ours. Some of these processes that we are waiting on might not be concluded until next year but we know that sooner or later they will be concluded, based mainly on the wealth of opportunities available.
Q: As an emerging private service provider to Mexico’s oil and gas sector, how do you interpret the national industry’s political environment?
A: Obviously when you hear some of the things that the president says in his daily speeches, you are liable to come away from that with a certain impression. However, I am a positive person and, more importantly, I believe in the usefulness of reading between the lines. Mexico is also in the process of negotiating a new loan with the IMF which, given this administration’s financial prioritization of supporting PEMEX, might turn out to be the one game changer that everybody has been waiting for. The country definitely needs something like this to detonate all the developments that are waiting in the wings.
Q: How did you adapt your M&A focus to the market and what potential opportunities do you see to strengthen your local offering?
A: The know-how that we bring to the table from previous experiences can be applied to situations that we know we will face in Mexico. An M&A approach might strengthen our local offering but it is one of many options that will be available to us. First, we need to demonstrate how far our experience will get us in Mexico in the development of a project, which is a phase we are still expecting to reach. Once we have made clear our capabilities, especially in terms of efficiency, as well as with safety standards and results, we can then further develop our strategy and see what type of role an M&A focus could have.
Q: How would you compare the general working environment of onshore drillers between Calgary and places like Veracruz and Tabasco?
A: The much lower temperatures of Canadian drilling operations present unique technical challenges that have to be discarded and replaced for new ones when working in Mexican onshore fields where temperatures are almost a mirroring opposite. However, there is some overlap that you can take advantage of. For example, your personnel will already be trained for difficult work in extreme environmental conditions and much of your equipment will be shielded against the environmental wear and tear that Canada and Mexico have in common.
ICON Drilling Services is a Canadian drilling services company alongside a fleet of newly built, modern and technologically advanced AC rigs specifically designed to optimize efficiencies and dramatically reduce expensive downtime and labor costs.