Preparing for Likely Explosion in Subsea Activity
STORY INLINE POST
Q: What are the main business opportunities that Oceaneering is currently focusing on?
A: We see many opportunities for Oceaneering in two specific areas. In the short-term, we expect the Energy Reform to boost development of upstream and midstream assets. Doing so will require survey positioning services and asset integrity services, both of which Oceaneering provides. We have a lengthy track record for offshore and land inspections, corrosion services, and implementing integrity management systems in Europe, the Middle East, and other regions. Furthermore, we can leverage the current position of C&C Technologies in marine construction and land surveys to expand our offering in Mexico.
As for offshore, we expect that a few years will go by before we start seeing concrete deepwater developments. First, the targets must be identified and important investment decisions must be made. When the wells start being drilled, Oceaneering will look at ROV support opportunities. Although this may take a while, this is the right moment to position ourselves. Finally, even though there are currently no significant subsea developments in Mexico, pipeline and platform infrastructure continues to be developed, which will require inspection and maintenance. There are enough business opportunities for us to have a good and solid presence in the country.
Q: Which of Oceaneering’s products are best positioned to meet future demand in Mexico?
A: Instead of pointing to something specific, I will focus instead on our well-balanced portfolio. We are most known for ROVs, which comprise about 30% of Oceaneering’s revenues. The ROVs are the main enabler for most of what we do and they can be found providing drilling support at a rig, or operating for inspection, maintenance, and repair (IMR) vessels. Oceaneering is extremely strong in drilling support, where our track record for uptime is more valuable due to the high cost of operations.
We sell more than US$1 billion worth of subsea products annually, such as connection hardware and umbilicals, and also have a fleet of vessels to provide IMR services. Therefore, we are highly capable of providing many solutions to our clients.
Since the offshore drilling market is currently stagnating, our emphasis is on the development and production phases of a field’s lifecycle. It is important to understand that business is not only based on how many wells are going to be drilled, but also on the size of the installed base of subsea infrastructure. As the complexity of the subsea architecture increases, the need for IMR services increases as well. That is where Oceaneering is strong as having an asset integrity business complements having an ROV and vessel operation business. On top of that, we now have AUVs and survey capabilities, resulting in a diverse portfolio of solutions that can respond to nearly any need our customers may have.
Q: How does your recent acquisition of C&C Technologies fit into your global strategy?
A: C&C Technologies brings us several complementary capabilities, including conventional survey capability, deepwater AUV technology, and satellite-based positioning services. As one of the largest providers of survey services in the world, C&C Technologies is also a leader in deepwater AUV technology. These elements fit very well into our field life cycle strategy. C&C Technologies has an extremely healthy business in Mexico with 150 people performing marine and land construction survey services as well as geophysical work. Our combined experience provides a strong foothold to start expanding our services.
In general terms, we are optimistic about the future of the Mexican oil and gas industry. We are currently hard at work developing business plans and trying to understand the opportunities that lie ahead. The acquisition of C&C Technologies is definitely a big move in that direction. It brings us closer to this market and gives us a solid basic structure in the country. Building on that, we will start bringing our services and products into Mexico one by one. Most of the opportunities Oceaneering has seen in Mexico lie in the upstream segment, but I am convinced we will also find some in midstream and downstream operations.