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32. FMC Technologies Reports Strong Fourth Quarter Results.
Company Press Release: 16 February 2009
Earnings Conference Call: 17 February 2009
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FMC Technologies recently reported strong operating gains for its
fourth-quarter and full-year 2008. Results benefited from strong
gains in its Energy Productions Systems division that is largely
focused on developing Subsea Production systems, systems that allow
a single rig to extend tentacles that manage multiple well
locations. The company highlighted the following quarterly
achievements:
- Record subsea
systems revenue of $788 million
- Energy Production Systems operating profit up 39 percent
- Acquisition of a 45 percent interest in Schilling Robotics, LLC
completed
- Company provides 2009 guidance for diluted earnings per share of
$2.40 to $2.65
During a conference call, management commented further on the
company’s Subsea opportunities. During the quarter, FMC “achieved a
new Subsea completion depth record of 9,356 feet . . . at Shell’s
Perdido Development, located in the Gulf of Mexico.” And “As more
complex Subsea systems, such as Subsea Processing, are installed on
the ocean floor, we envision increased use of ROVs during the life
of the Subsea field, including the initial installation,
maintenance, and monitoring of the
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equipment on the seabed.” FMC's Chairman, President and Chief
Executive Officer Peter D. Kinnear, in response to an
analyst’s inquiry, comments, “I think one of the things that was
attractive to Schilling, with regards to their joining FMC was our
global infrastructure and the way we could maybe help them grow
internationally, so we are anticipating that we can help Schilling
leverage from that respect and grow significantly into Brazil, into
the Far East and other areas, West Africa, that they’re not yet have
really penetrated.” He further states, “But I think there’s much,
much more complexity going on in the seabed as, most of it’s ROV
related and every project we do, there’s significant specialized ROV
tooling related to what we do. There’s standard tooling that can hot
stab or open a valve or close a valve, but there’s also very, a lot
of specialized tooling so, we think there’s just a lot of synergies
between what we do and what Schilling can do, and so expanding their
global reach, getting us more integrated on the Subsea ROV
interfaces with our equipment, we just think there’s good synergies
and as Bill said, we think they’re a great little technology company
and have a great product.”
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31. What’s Next for Schilling—Deep, Deep Subsea
Controls.
Global Province
March 2009
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Schilling Robotics, having captured a leading share of the market
for robotic manipulators and remotely operated vehicles, is known
for its commitment to innovation in deepsea exploration and
research. That tradition continues as the company leads the way on
developing a new generation of subsea control products that will be
critical to enhancing a wide range of deepsea activities. Scientists
who’ve planted research facilities on the oceans’ bottoms and oil
companies forced to explore in depths up to 2˝ miles deep are
spurring demand for new products. The “technical ramifications are
formidable,” as “more and more of the whole oilfied process has to
be done close to the wellhead.” But the rewards are commensurate
with the challenges. In what are potentially “more powerful” than
space stations, “two scientific observatories,”
The Venus program
off British Columbia (Victoria Experimental Network under the Sea)
and the Monterey Accelerated Research System foreshadow the
capabilities and opportunity of Schilling’s research. “For the oil
companies these subsea facilities will amount to smart factories,
which, in fact, will be more agile and require less direct human
contact than the factories of the future that are now emerging on
land.”
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A “key consideration” in newly emerging deepsea tools is
digitalization, an area where Schilling brings competitive
advantages. It has a long history of “packaging electronics for use
in the ocean deep” and more than 2 decades of practical experience
with manipulator arms. And while “subsea exploration and production
(being) only 10% wired” provides evidence of under-investment by the
oil industry, Schilling “has often spent aggressively on new
projects and, for the last five years, its research expenditures
have amounted to about 6% of sales on average.” This compares,
according to Booz & Co, to the chemical and energy industries’
average of less than 1% of sales. One item currently under
development is a serviceable network gateway, a control package that
is analogous to a network switch. It is durable, easily portable,
remotely reprogrammable, supports multiple interfaces, and has an
“open digital pipeline to which companies can attach a variety of
equipment and software configurations.”
“At
the moment we are just at the beginning of this effort: only a
fraction of our subsea oil exploration activities are digitally
enabled. Schilling is trying to provide a digital pipeline open to
all comers which can give oil explorers and producers hands-on
control in the ocean deep.”
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30. Graham Hawkes Spurs Demand for Personal
Submersibles Amongst the Super Rich.
USA Today;
by Marco R. della Cava; 07 July 2008
Forbes Magazine; by John Sedgwick; 21 April 2008
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While scientists and oil and gas explorers have operated in the
ocean’s depths for decades,
Graham Hawkes has quietly developed a
new-era of submersibles that has attracted the attention of the
super rich, including the late American adventurer
Steve Fossett,
venture-capitalist owner of the $180 million Maltese Falcon yacht
Tom Perkins, and Virgin Airlines’ high-profile chief executive
Richard Branson. But
USA Today stresses that Mr. Hawke’s interests go well beyond providing
the newest millionaire status symbols, he’s committed to creating a
new awakening to the vast nature of the oceans and their importance
to our existence. He wonders why we spend so much money and time
going to Mars, when the depths of our own oceans go virtually
unattended. Recalling a “religious” experience where he was
“drifting up in darkness surrounded by billions of photoluminescent
creatures, “Mr. Hawkes feels compelled to go beyond scientists to
“take writers and politicians, people who can convey the beauty that
is there and
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perhaps do
something to take care of it.”
Forbes Magazine pays tribute by writing, “The grand eminence in his
field--perhaps the only eminence--Hawkes has personally designed and
built three quarters of all the personal manned submersibles ever
made, totaling more than 60 craft.” Forbes goes on to write that
while Mr. Hawkes’ competitors continue to make what he refers to as
the “undersea equivalent of dirigibles . . . bulbous, cumbersome,
slow moving craft . . . his are designed to be speed cruisers, the
equivalent of an underwater private jet.” His latest incarnation,
the two-person
Deep Flight Super Falcon, is “.
. . able to roam. Its pilot
is free to cruise along, taking in the Imax-like view, nose down to
descend an undersea cliffside, or soar up to the surface. He can
also perform underwater barrel rolls or loop-the-loops.” Mr. Hawkes
overseas the development and construction of his submersibles from
the headquarters of Hawkes Ocean Technologies located on San
Francisco Bay.
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29. Dr. Sylvia A. Earle Mapping the Sea and Its Mysteries.
The New York Times;
by William J. Broad
12 January 2009
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While much of the attention of manned and remotely-operated subsea
vehicles is placed on the efforts of the oil & gas industry’s
efforts to explore and operate production facilities at ever greater
ocean depths, it is worth noting that there is a vibrant and growing
industry extending from millionaires developing personal submarines
to scientific research delving into the mysteries of the deepest
oceans. A New York times
story delving into these trends notes that
one such researcher, Dr. Sylvia A. Earle, an oceanographer and
former chief scientist of the National Oceanic and Atmospheric
Administration, has co-authored a landmark publication, “Ocean: An
Illustrated Atlas.” Dr. Earle’s work is credited with having
contributed to President Bush’s designating areas of the Pacific
Ocean larger than the state of California as marine
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monuments. Though Dr. Earle’s
early work was stymied by a lack equipment capable of exploring the
oceans depths that reach down to seven miles, her efforts at
developing “innovative vehicles” spurred her research, including the
rise to fame of Prochlorococcus, a microbe “so small that millions can
fit in a drop of water.” According to the New York Times article, Dr.
Earle comments that this tiny organism provides “one in very five
breaths we take.” Got your attention! Though major advances have and are
continuing to taking place, Dr. Earle notes in her Atlas that the seabed
“is still not as well imaged or mapped as the Moon or the surface of
Mars.” Sounds like significant opportunity for innovation and
exploration remains. For an enlightening deep-sea slide show, go
here.
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28. FMC Technologies Will Acquire 45% of Schilling
Robotics for $116 Million.
FMC Technologies News Release
26 December 2008
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FMC Technologies (NYSE:
FTI) has acquired a 45% interest in Schilling Robotics for $116
million in a deal to close before yearend — as expected, the
transaction was completed shortly after this announcement. FMC is
also buying an option to acquire the remaining 55% of Schilling
during the two years beginning in 2012. The two companies’
technologies are nice compliments; FMC Technologies is “the leading
manufacturer and supplier of subsea production systems,” for the
third time being named the most admired oil and gas equipment
company in Fortune Magazine’s
annual rankings. Schilling “is a leading producer of ROVs
(remotely operated vehicles), ROV manipulator systems, control
systems, and other high-technology equipment and services for oil
and gas subsea exploration and production.” FMC Chairman and CEO
Peter D. Kinnear believes that the combination “is a unique and
exciting opportunity to expand (FMC’s) subsea business in a new
direction . . .” including the ability to “participate more fully in
the increasing integration of remote activities performed on the
seabed such as subsea processing, well intervention and production
optimization.” Schilling Robotics’ Chairman Tyler Schilling
observes, “FMC understands and
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endorses our strategy to introduce innovative digital technologies
in response to the growing
communications and control challenges facing our
customers in the subsea environment.”
Regarding the news, the Houston Chronicle
reports:
While FMC has long been a manufacturer of products
that sit on the seafloor and are used to produce and separate oil,
natural gas and water, the company has not manufactured its own
fleet of remote-operated vehicles, which are used to install and
repair underwater equipment.
The Schilling partnership will give FMC the ability to
manufacture ROVs, but it will also broaden the company's knowledge
of how energy equipment works in the high-pressure, highly corrosive
underwater environment, according to FMC Chairman Peter Kinnear.
``This is a great niche expansion for us,'' he said. ``Our scope of
services to oil companies will be extended, and our subsea revenue
is $3 billion globally, so Schilling will get the international
exposure it has been looking for.''
The Chronicle goes on to comment that Tyler Schilling is
“particularly excited about a breakthrough ethernet switching
product that can be used to depths of 2.5 miles, allowing for better
well monitoring and control,” essentially bringing the Internet to
the seafloor.
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27. FMC Technologies Equipment Sets New World
Deepwater Record.
FMC Technologies News Release
02 December 2008
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A new world-record depth of 9,356 feet was recently achieved for the
completion of a subsea well using FMC Technologies’ (NYSE:
FTI)
enhanced vertical deepwater
tree system. The record was set at Shell’s Silvertip field in
the Gulf of Mexico. It is the latest in a long
history of records for FMC dating back to the 1980s, most
recently at 8,995 feet in the Gulf of Mexico in cooperation with
Anadarko.
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The recent project leveraged FMC’s award-winning technology that
offers “a number of innovative features that provide versatility,
installation savings, and operational efficiencies in
ultra-deepwater field development.” Given the increasing importance
of deepwater development, “Achieving this milestone is an important
accomplishment for the FMC and Shell teams,” said John Gremp,
Executive Vice President of FMC Technologies.
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26. A Brief History of Schilling Robotics.
Brief History of Schilling Robotics
08 December 2008
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During the same decade that man was landing on the Moon, remotely
operated vehicles (ROVs) were beginning to explore the depths of the
deepest oceans. By the 1980s, energy explorers embraced the
technology in order to tap oil and gas reserves locked at depths
unsuitable for human exploration. It was during this energy surge
that Schilling Robotics was born when Tyler Schilling invented a
better manipulator.
A suite of manipulators followed, allowing the company to “seize ľ
of the manipulator market.”
Schilling subsequently made the move into ROVs and is now “moving
into subsea controls that will help companies safely and capably
maintain their deep sea installations.” Known as ‘workover’ tasks,
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there are a
“host of applications for well maintenance and other aspects of
controlling subsea producing wells.” Though routine for
shallow-water wells, the products for deepwater applications are
just “now being developed. The need for remote control techniques is
expanding by leaps and bounds in deep sea offshore petroleum
exploration, production, processing, and maintenance.” Schilling’s
opportunities in this emerging field will be enhanced by its
“ability to tightly network and form enduring relationships” within
the exploration community, including with industry leading
Oceaneering International.
To read more, go to
A Brief History of Schilling Robotics.
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25. Schilling Robotics Historical Timeline
08
December 2008
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Dec 2008 |
FMC Technologies Acquires 45% of Schilling Robotics for $116 million.
The stratetic alliance will allow Schilling to extend its worldwide
reach. |
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June 2008 |
2000
Manipulators in service.
Installed base of arms surpasses 2000 units. |
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Dec 2007 |
27th
ROV Delivered.
Momentum
in ROV market is clear. |
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Jan 2006 |
Acergy ACV.
Acergy
selects Schilling Robotics to provide Next Generation ROV platform. |
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Oct 2005 |
EXPRO AX-S
Control System.
EXPRO
is a leader in the field of well flow management. Schilling enters much
larger market to extend capacity of subsea wells and deal with
exploration and production problems that arise at depths of 1 to 2
miles. |
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May 2005 |
First
Hydraulic ROV.
UHD ROV delivered to Geoconsult. |
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Oct 2003 |
Management
buyout from ALSTOM.
Alstom changes its strategy. |
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April 2001 |
Schilling
Enters ROV market.
Quest ROV delivered to Canyon Offshore. |
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April 1998 |
New Schilling Subsea Architecture. Remote
Systems Engine (RSE) undertaken. A
$20 million project to create building blocks for all future
applications-manipulators, ROVs, subsea controls. Technology fuels
takeoff of company. |
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Sep 1996 |
Conan
7-function manipulator.
Designed for middle market, high-volume applications. Ramps up Schilling
market share in manipulators. |
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Dec 1992 |
GEC
Alsthom Buys Schilling.
Huge expansion of R & D. Schilling management continues to run
independent subsidiary operation. |
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Aug 1990 |
Titan 2
manipulator.
Tougher and more dexterous than the 7F. Speedy line extension. |
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Feb 1987 |
Four Titan
(titanium) 7F manipulators bought by Ametek.
Also opens new market segment for company — nuclear power. |
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June 1986 |
Fast
Rollout of HV5F.
Two manipulators sold to Sonat Subsea Services in Houston. |
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May 1985 |
Founding in Davis. Company started with Prototype of HV5F as Cover
Story for SubNotes Magazine. Small hydraulic manipulator
rapidly designed in collaboration with customers. |
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24. Hobart Birmingham and Taft Symonds Join
Schilling Robotics Board of Directors
Company Press Release
13
November 2008
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Amidst a time of rapid growth that includes an expanding worldwide
customer base and designs on expanding market share, Schilling has
announced the appointment of two new directors, Hobart “Hobey”
Birmingham and Taft Symonds. As Schilling contemplates future financings
and possible business combinations, Mr. Birmingham’s experience in
providing “consulting and investment
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banking services to high technology companies” should help the company
navigate through investment complexities both here and abroad. And
Symonds’s depth of experience in the oil and gas industry as Chairman of
the Board at a private investment firm bearing his name will greatly
help Schilling gain market share in subsea controls.
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23. Electronics Make Continuous Inroads into ROVs
and Energy Production
Offshore Magazine;
EngineerLive
10
November 2008
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The Navy was the first to deploy an ROV in the 1950s; it was used to
recover a hydrogen bomb off the coast of Spain. Interestingly, it was an
all electric ROV. But, as pointed out by William Furlow of Offshore
Magazine
Volume 60 Issue 3 March 2000, there was a problem with early
electric ROV technology; essentially, “as ROVs got larger, so did the
thrusters . . . (so) when hydraulics became a practical alternative, the
industry quickly shifted to hydraulic thrusters.” While hydraulic
technology has some clear advantages, it also faces some limitations,
particularly the burdensome weight of the umbilical at newly evolving
deepwater operations. So in somewhat of a return to the past, many are
looking into the benefits of electronics. In June 2008,
EngineerLive
spoke to this cycle of technologies by noting, “For the past two decades
electric and hydraulic ROVs have complemented each other, with the
bigger hydraulic systems finding its main use as work horses within the
offshore oil
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and gas industry, and the electric ROVs as well as many other
commercial, scientific and military applications.” They further
point out that “electric ROVs have seen a major shift in both size
and work capability, and several companies now offer electric work
class ROVs as well as deep diving electric ROV systems. Electric ROV
systems are now being offered with up to 6000metres as standard.”
Schilling’s
EHD Electric Heavy Duty ROV combines the advantages of
electric propulsion with the performance of heavy-duty, work-class
performance.
Electronics, as noted in a September 2008 Offshore Magazine
article,
continue to make inroads into subsea production. Total E&P Nederland B.V. – a subsidiary of Total S.A., one of the worlds largest oil and
gas companies – recently began pumping gas from the Dutch Sector of
the North Sea from its K5 field, “mark(ing) the world's first
utilization of an all-electric subsea production system.”
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22. Oceaneering International (OII) Third Quarter
Record Earnings ($0.99EPS) Boosted by ROV Profits
Company Press Release
30
October 2008
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On the back of “healthy demand” for the firm’s subsea services and
products, Oceaneering International recently reported another
quarter of record profits. And the full year 2008 should result in
the firm’s fifth consecutive year of record profitability. Financial
market turmoil, declining oil prices and the prospects of a global
recession has led company management to be understandably guarded
about commodity prices and the level of capital spending. But they
expect that “customer spending on deepwater prospects will be less
susceptible to a decline in commodity prices than those in shallow
water or on land,” and they are confident that with average oil
prices above $70 a barrel, the company is set to have another record
year in 2009.
Management, in a
conference call acknowledging continuing overcapacity in the
umbilical market that has led to the decision to reduce capacity at
its U.K. plant, said they are anticipating adding 24 to 30 vehicles
to its ROV fleet. With more than “80% of (its) investments during
the quarter and over 90% year-to-date hav(ing) been in (its) ROV and
Subsea product segment,” management expects that the firm’s 2009
capex budget “will be primarily
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dedicated to support growth of (the firm’s) ROV fleet to meet firm
demand.”
Though
acknowledging recent market upheavals, management does “see specific
signs of a healthy deepwater and subsea market that will drive
demand growth for our services and products in 2009 and beyond.” In
particular, management reports that, “as of the end of September,
over 95% of the existing 210 floating rigs in the world were under
contract. And over 80% of these are contracted through 2009. 100
additional floating rigs were scheduled to be delivered during the
remainder of 2008 through 2012 and 70 of those have been contracted
long-term for an average of six years. This year, seven new rigs
have been delivered, four during the third-quarter.” While admitting
there is some risk of order cancellation, management notes that even
if 20 of the 34 new rigs that haven’t yet begun construction were to
be delayed or cancelled, “we're still talking about growth of nearly
40% in the floating rig fleet. And growth of 190% in the
high-specification fleet which currently totals 42 rigs.” Bottom
line: “Deepwater remains one of the best frontiers for adding large
hydrocarbon reserves with high production flow rates at relatively
low finding and development cost.” |
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21. Louis L. Whitcomb of Johns Hopkins University
Reports on State of Deep Water Drilling
invited letter to IEEE 2000 International Conference on Robotics
and Automation
2000
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Louis L. Whitcomb of the Department of Mechanical Engineering, Johns Hopkins University,
presciently speaks to the growing demand for underwater robotic vehicles being
“driven by the needs of deep water oil production and deep ocean
telecommunication cable operations. Much of Mr. Whitcomb’s article
addresses the technological challenges faced by the two primary
underwater robotics platforms: Remotely Operated Vehicles (ROV) and
Autonomous Underwater Vehicles (AUV) that “operate without an
umbilical tether.” ROVs are more widely used in oil & gas
exploration, while AUVs, limited by technological challenges of
manipulator arms, are more generally being used for surveying,
research, and maintenance tasks. There are common challenges to
underwater robotics, including “the rapid attenuation of acoustic
and electromagnetic radiation in seawater (that) severely restricts
the range of high resolution acoustic and optical sensors . . . the
high ambient pressure of the underwater environment poses formidable
design challenges . . . (and) in the case of untethered vehicles,
underwater missions are limited not only by on-board battery storage
capacity, but also by the severely limited bandwidth and delay
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inherent in underwater acoustic
communication.”
Mr. Whitcomb notes that, “Continued strong demand for oil, coupled
with dwindling shallow-water oil reserves, has spurred the
development of technically challenging deep water wells.” Estimates
are that “production wells will be operating at depths to 2300m
(7500 feet) within the next five years.” See citation 19 for details
of Petrobras’ initiatives at 8,500 feet). “The oil-field mission of
subsea equipment installation, inspection, manipulation, and
maintenance demands large high-power ROVs equipped with powerful
robotic arms, high-resolution cameras, and sophisticated tool
packages to perform a variety of specialized tasks.” Noting the
technological challenges regarding umbilical cable power capacity,
vehicle power efficiency, power and data transmission, and
navigation and control, the author highlights the industry’s “novel”
response by pointing to Schilling Robotics’
Quest ROV for its electric thrusters and its SeaNet
telemetry system for taking “the data-concentrator approach out of
the research laboratory and into the commercial field.”
For more on Johns Hopkins’ ROV research, click
here
and here.
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20. Oil & Gas Industry Analysts and Other Industry
Observers.
Directory of Oil & Gas Industry Analysts and Industry Observers
15 September 2008
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We’ve compiled a
directory of financial analysts and other observers of the
rapidly changing Oil & Gas industry, with a particular emphasis on
the petroleum and petroleum equipment industries.
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Previously we have established lists of
oil equipment and service companies and of
universities and other institutions focused on both the oil
equipment and robotics sectors.
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19. Petrobras' Cesar Palagi Highlights Innovative,
Ultra deepwater Technology to be used in Gulf of Mexico.
Offshore Magazine
14 August 2008
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Offshore Magazine recently hosted a
live webcast presentation with Cesar Palagi, Walker Ridge
Production Asset Manager Petrobras America, Inc. (PZE),
a world leading drilling and exploration company with 69,000
employees. The company has a history of industry innovation,
including in ultra deepwater drilling. Currently, Petrobras is
developing two new well sites (Cascade and Chinook) roughly 106
miles south of Louisiana. Initial work began in 2002, but the heavy
lifting started in August 2006. The wells will be drilled in an
average water depth of 8,500 feet and they will reach ultimate
depths of some 27,000 feet. There is substantial industry interest
due, in part, to a range of new technologies that will be deployed.
Though
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having used Floating Production Storage and Offloading systems (FPSO)
since 1982 off the coast of Brazil, it will be the first time an
FPSO will be used in the Gulf of Mexico. Subsea boosting (aimed at
increasing the flow of crude), hybrid risers (method for
transporting petroleum products in deep water from the seabed up to
a floating or semi-submersible surface structure), specialized
installation vessels, and the use of offloading oil from specialized
floating production storage facilities to shuttle tankers are but a
few of the unique technologies that will be deployed. Sufficient
flexibility is being designed into the facilities to allow for the
connection of up to 13 additional drill sites. Should production
meet expectations, additional platforms will surely be deployed.
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18. Simmons and Company International's Matthew R.
Simmons Presents
Overview of Global Oil Service and Contract Drilling Industry.
Simmons and Company International
31 October 2007
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In a
presentation on the Energy Markets entitled, “For Lack
of a Nail, The War Was Lost,” Matthew R. Simmons, Chairman of
Simmons and Company International, makes the case that out of
a 25-year depression in the drilling markets, survivors are now
enjoying a period of sustainable prosperity, driven in large part to
tight rig capacity and deepwater drilling.
In the face of sparse aggregate data on industry assets, there is
little doubt that the “oil service/drilling industry is supported by
(a) massive employee base.” And the bottom line going forward is the
“world needs far more rigs.” Mr. Simmons cautions about
overlooking the service industry, where the “rubber meets the road.”
Following a substantial build-out of rig capacity during the 1970s,
“massive layoffs occurred” and “bankruptcies were commonplace.” Mr.
Simmons
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commenting, “The industry collapse was (the) energy industry’s worst 20th
century downturn.” But there were survivors, and technological
advances marched on in areas of “deepwater drilling, horizontal and
steerable drilling systems, multilateral well completions, subsea
well systems/satellite tiebacks, 3D and 4D seismic, hydraulic fracing, and measurement while drilling.” Survivors are now thriving
with 100% utilization rates, strong profitability and rising
backlogs.
It is important to note that the “average age of (the) offshore rig
fleet is 25 years.” While this raises the risk of equipment failure,
it is also driving strong demand for new products with “almost all
new builds (being) deepwater units.” But “it will take years to
deliver the surge in new deepwater rigs,” and a shortage of people
“is now acute.” And while there is no denying the cyclical nature of
the drilling industry, “without rigs, reserves remain in the
ground.”
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17. Oceaneering Int’l (OII) Second Quarter Results Boosted by Strong ROV Segment.
Company Press Release &
Conference Call
30 & 31 July 2008
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Oceaneering International recently reported record second quarter
earnings due, in part, to strong performance in the firm’s ROV and
Subsea Products groups. Company President and CEO, T. Jay Collins,
commented that amidst “rising market demand” Oceaneering “attained
all-time high average ROV revenue per day-on-hire” and as a
consequence was “raising (the company’s) ROV annual operating income
growth range.” In the company’s conference call (available here),
management acknowledged slippage in the deployment of umbilicals
which are generally deployed late in the overall exploration
process; but
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they also expect “a substantial increase in umbilical throughput for
the second half of 2008.” On the basis of the outlook for its ROV
segment being “very bright,” more than 90% of the firm’s capital
expenditures in the last quarter and year-to-date have been in the
ROV and Subsea Products segments. In addition, management stated
that they’ll be looking for “additional accretive acquisitions . .
.” in line with the firm’s previous purchases of products companies.
They further state an interest in ROV acquisitions, acknowledging
that “there are (a) limited number of players out there left for us
to acquire.”
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16. Schilling Robotics Appoints Clay Cottingham as
New Head of Customer Service.
Company Press Release
28 July 2008
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Schilling Robotics has announced that Clay Cottingham will be
drawing upon his experience in the Navy to help the company
implement a new “collaborative” customer service system in his role
as the new vice president of customer service. In addition to using
close customer ties to improve next
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generation subsea controls and ROVs, Philip R. Otto makes the case
that with the company “well beyond $100 million in annual sales,
management must provide an integrated infrastructure that can
deliver flawless service and consistent results. I’m pleased to say
that we’re on track to get this done.”
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15. SMD acquired by Inflexion; Perry Slingsby
Systems acquired by Triton Group.
Thompson Merger News; April 2008
BNET Business Network; March 2007
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In the spring of 2008, Inflexion Private Equity acquired via a
management buyout
SMD, a leading subsea engineering company
specializing in remotely operated vehicle systems. Annual capex
spending in the work class ROV segment, an area of SMD expertise, is
expected to grow “by more than 50% over the next three years as
developers are forced to explore deeper waters and increasingly
harsh conditions to satisfy sustained demand for oil and gas.”
The SMD acquisition follows a similar management buyout of
Perry Slingsby Systems in 2007, a buyout that served to form a new entity,
Triton Group Holdings. Perry Slingsby has 50 years experience in
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the design and production of ROVs, trenchers, Tether Management
Systems and other subsea systems and technologies. Though Perry
management took investment stakes in Triton, the principal
shareholder was SCF Partners. The new CEO of Triton commented, “PSS
has grown considerably in the last 3 years and are in an extremely
strong position. Additional investment is required to continue this
growth and to take advantage of the market conditions and
opportunities.”
With the increasing concentration in marine robotics and ROVs, there
are very few pure-play companies left in the business today.
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14. Schilling Robotics Surfaces as Privately
held leader in ROV technologies.
Underwater Magazine; November/December 2003
The Sacremento Bee; 01 November 2003
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Schilling Robotics began operations in 1985 as a specialty maker of
manipulator arms for the offshore oil and scientific markets. The
firm’s first models became popular amongst subsea participants,
eventually capturing the eye of the US Department of Energy. Such
attention by the DOE raised Schilling’s profile and the company was
acquired by GEC Alsthom in December 1992. Tyler Schilling, the
company’s co-founder continued to run and manage the company. When
GEC Alsthom went public in 1998, the Schilling assets became know as
Alstom Schilling Robotics. It was then that the company began
developing its Remote Systems Engine (RSE) that was used by ROV
makers as a building block for their newest ROVs. In late 2001,
amidst an industry downturn, Alstom decided that it would seek to
divest the Schilling assets. CEO and company co-founder Tyler
Schilling eventually led a management buyout in October 2003 and
began to build on the company’s long history of excellence as a
supplier to the offshore drilling and exploration industry. Evidence
of the firm’s excellence can be found in its having captured an
estimated 75 to 80 percent of the deep-sea robotic manipulator
market. The firm’s manipulators can reach depths of 6,500
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meters (over 4 miles) with the ability to pick “up a seashell” but
also “lift 250 pounds and grasp with 2,000 pounds of pressure.”
While dominating the market for manipulators, Schilling made
a strategic emphasis on manufacturing complete ROVs -- with today’s
strong market, clearly a prescient move. A substantial R&D effort
while part of Alstom led to Schilling’s own line of ROVs, an
all-electric ROV called Quest. Tyler Schilling commenting in late
2003, “We are now in a position to supply customers with components,
pre-integrated subsystems, or complete turnkey systems.”
The development of the Quest ROV forced Schilling to deal with
integration issues that its customers had to deal with when
incorporating Schilling’s RSE into their ROV products, lessons
learned enhancing Schilling’s overall product line. Canyon Resources
and the University of Bremen were early customers. Building on the
success of Quest, Schilling rolled out a newer hydraulic propulsion
ROV, the Quest UHD (ultra heavy duty) ROV. According to Tyler
Schilling at the time, “With the addition of the Quest UHD, we'll be
able to address all segments of the work-class ROV marketplace.”
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13. Paul Whalen, New Senior V.P. of Operations,
to Accelerate Systems Delivery.
Company Press Release
17 July 2008
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Schilling Robotics recently announced the latest in a string of
management appointments with the news that Paul A. Whalen will
assume the position of senior vice president of operations.
According to company CEO Philip F. Otto, Mr. Whalen’s experience at
Toyota’s Long Beach, CA, manufacturing facility provides him with
the skills
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and practical background necessary to smoothly drive the growth of
Schilling’s complex manufacturing systems.” The release goes on to
say Mr. Whalen brings an ability to “tackle diverse scenarios in
inventory management, production streamlining, quality assurance,
and product upgrade.”
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12. Capacity Constraints Crimp Drilling but Spur
Strong Pricing.
The New York Times; by Jad Mouawad and Martin Fackler
19 June 2008
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The demand is very high for offshore oil exploration and production,
but it is quite apparent that both logistical and technological
advances need to be made in order to seize the opportunity. The New
York Times’ writers Jad Mouawad and Martin Fackler recently
spotlighted the “critical bottleneck” that has resulted from a
global shortage of drilling ships. The authors note that “the
world’s existing drilling-ships are booked solid for the next five
years.” In addition to forced exploration delays, shipbuilders “have
raised prices since last year by as much as $100 million a vessel to
about half a billion dollars.” Prices are rising throughout the
supply chain as indicated by “drilling costs for some of the newest
deepwater rigs in the Gulf of Mexico have
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reached about $600,000 a day, compared with $150,000 a day in
2002.” The authors’ note that drilling capacity isn’t the only
constraint on energy companies; development costs have doubled in
five years, increased competition, steel shortages, insufficient
engineering and manufacturing capacity, and an aging work force.
Harris S. Lee, VP in charge of Samsung’s offshore drilling rig
business points out, “The oil reserves that were easy to reach are
all drying up. The future is in exploring the deep seas and harsh
environments,” including the demanding conditions of the Arctic with
substantial ice, 50-foot waves and temperatures to minus 40 degrees.
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11. Schilling Apoints New Controller and Head of
Human Resources .
Company Press Release
10 July 2008
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Schilling Robotics has added two new executives to its expanding
management team. John Kehoe, Schilling’s senior vice president and
chief financial officer comments that the addition of Gil Llacuna as
the company’s new vice president and corporate controller “will
enable us to achieve transparency when we undertake financings, but
it will also help us achieve superior control over asset management,
financial management reporting, and other processes
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that are critical for successful global enterprises.” At
the same time, it was announced that Sally Larocca was appointed to the firm’s newly
created position of vice president of human resources. As a leader
in the market for ROVs and subsea control systems used in oil and
gas subsea exploration and production growing at 40% annually,
“Solid recruiting and human resource management is critical for us
to be able to rapidly grow our business globally,” comments Mr. Kehoe.
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10. John Kehoe Appointed New Chief Financial
Officer; Part of Expanded Management Team .
Company Press Release
25 June 2008
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Schilling Robotics reports that at a time of “40% annual revenue
growth and accelerated offshore drilling activity” it has appointed
John Kehoe as senior vice president and chief financial officer as
part of the company’s plan of “installing a fast response, agile
management organization.” Philip F. Otto, Schilling’s president and
CEO, commented, “John comes aboard as our administrative and
financial tasks become more complex and as we free up other key
management for critical tasks in their areas. In particular, our
founder and chairman Tyler Schilling is now tightly focused on
leading-
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edge development of new products that will take advantage of our
solid development platform but also keep us in the forefront of our
industry.”
John Kehoe played a key role in Level One Communications’ 50% annual
growth between 1995 and 1998 and the eventual sale of the company to
Intel in 1999 for $2.2 billion. He also served in a variety of
financial and senior management roles in technology companies that
include Intel Corporation, Focus Surgery, Inc., Celeritek, Inc.,
Poqet Computer Corporation, Silicon General, and Texas Instruments.
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9. CNBC’s Jim Cramer Highlights Rapid Growth
of Offshore Drilling and ROVs.
CNBC's Mad Money
24 June 2008
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Mad Money talk show host, Jim Cramer, recently spotlighted
the range of new technologies, including ROVs – “unmanned,
joystick-controlled machines (used to) inspect deepwater pipelines,
repair leaks, assist in drilling and remove waste material left
behind by drillings” -- that have made clean, offshore oil
exploration, drilling, and production a reality. During a weeklong
series, he spotlighted ROVs as a “critical component” to the overall
process of clean energy development.
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Estimates are for overall offshore drilling investments to be $305
billion from 2007 to 2011, up some 50% from 2004-2006. Deep water
spending is expected to grow from 21% to 29% of the total offshore
market. A subset of the market for umbilical should grow at a 25%
compound annual rate from 2006 to 2011. Schilling Robotics is the
worldwide leader in providing subsea robotics and control products to
the oil and gas, scientific, and military industries.
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8. Two Schilling Contracts highlight escalating
ROV demand
Offshore Source Magazine
May 2008
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Offshore Source Magazine’s May 2008 issue speaks to the
escalating demand for ROVs with an article that includes a review of
Schilling’s contracts to supply ultraheavy-duty UHD ROV
systems to Global Industries
and Bourbon. The
Global contract called for two systems to be delivered during
the first quarter of 2008, while the
Bourbon deal calls
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for an initial order for four systems to be delivered over the
course of 2008 and 2009. The Schilling ROV units are rated for depths up
to 4,000 meters and include several of Schilling’s advanced features,
including its extended excursion XE Tether Management Systems and
its Remote Systems Engine technology.
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7. Oil & Gas Equipment & Services Companies
Directory
Oil & Gas Equipment &
Services Companies
02 June 2008
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This will link you to our Directory of Companies providing equipment
and services to the Oil & Gas industry where you will find links to
the companies' home pages. We will be adding to this list. We urge
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you to supply us with the names of the many companies we are
missing, since we want this list to be as comprehensive and useful as
possible.
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6. Schilling Robotics to Present at 2008 Offshore
Technology Conference
2008
Offshore Technology Conference
April 2008
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Schilling Robotics will be presenting (Booth
9517) at the 2008 Offshore Technology Conference being held May
5-8 at the Reliant Center in Houston, Texas. The conference,
considered the premier offshore industry event for professionals,
service
industries and suppliers, has shown growing interest
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in recent years. Last year's conference accommodated more
than 67,000 visitors, an increase of 13% over 2006 and a conference
record. There were about 2,400 presenters last year representing more
than 30 countries.
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5. Schilling Robotics Appoints Philip F. Otto CEO.
Company Press Release
22 April 2008
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With
founder Tyler Schilling moving into the role of Chief Development
Officer, the company has appointed Philip F. Otto as CEO. In his new
role, Mr. Otto will be charged with broadening the firm's senior
management team at a time that "demand for (the firm's) equipment
and services has reached unprecedented levels." Mr. Otto is "a
Silicon Valley veteran and former chief executive of several high
growth technology companies."
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He
brings "extensive experience in restructuring and expansion of
companies, mergers and acquisitions, as well as broad dealmaking and
marketing activity throughout Asia and Europe."
Given
the expected changes in deepsea drilling activity over the next five
to ten years, entrepreneurial companies are being presented with a
"special opportunity".
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4. Global Industries Anchors Subsea Fleet with Schilling's Ultraheavy-duty UHDTM ROVs
Company Press Release
03 April 2008
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Global Industries has acquired two of Schilling's ultraheavy-duty UHDTM
ROV systems during the first quarter of 2008. The systems "will allow
Global Industries to operate in the harshest subsea environments and
perform the most demanding construction and intervention tasks."
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Jim Dore of Global Industries commented, "Global selected Schilling
because of its outstanding reputation as a leading manufacturer of ROV
systems and robotics. We anticipate that these systems will leapfrog us
into yet another phase of strategic growth of Global Industries."
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3. Exxon to Increase Exploration Budget by $1 Billion
The Wall Street Journal; page B1, by Russell Gold
06 March 2008
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Challenging political environments abroad have made it increasingly
difficult for large oil companies to replace their reserves. But with
coffers filled with profits, many, including Exxon, are seeking to
broaden their exploration horizons, including offshore areas around
Ireland, Greenland, New Zealand, and Madagascar as
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well as of the coasts of OPEC members Libya, Qatar, Nigeria, and Angola. The biggest oil strike in ten
years offshore Brazil last November heightened anticipation for new
fields, and the technology for drilling in wells two-miles deep is
now available to support exploration in new areas around the globe.
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2. Drilling Activity Hits New High in Ultra-Deep Gulf of Mexico
U.S. Department of the Interior;
Minerals Management Service
14 August 2007
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The
U.S. Department of the Interior
reports that "A record number of drilling rigs are currently
working in ultra-deepwater in the gulf of Mexico." Never before in
the Gulf have 15 rigs been drilling for oil and gas in greater than
5,000 feet of water.
Production has also been on the rise, as evidenced by the start up
of Independence Hub, "a semi-submersible platform located in 8,000
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feet of water . . . " It is "The deepest production platform
ever installed and also the world's largest offshore natural gas
processing facility." The MMS reports that, "As the industry
continues its exploration in deeper waters, the availability of
technology capable of operating in deeper water depths and more
extreme conditions becomes an important issue."
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1. Work-class ROV market to grow 76% by 2011
Offshore Magazine; Volume 67, Issue 4; by Rod
Westwood
April 2007
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Reporting on the results of a study conducted by
Douglas-Westwood
Ltd., Offshore magazine highlights the tripling of work-class ROVs
since 2002 and the expected 76% additional growth by 2011 to $1.458
billion. North American and Europe are expected to account for half
of the worldwide market.
"Demand
drivers" are primarily the "high and sustained oil prices of recent
years" that have led to "high levels of drilling activity and increased
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installations of subsea wells, pipelines, control cables, and other
hardware." Importantly, much of the increased activity "is
increasingly happening in water depths beyond the economic reach of
manned intervention," thus sparking demand for ROVs.
Analysts also anticipate that shortfalls in rig availability will
put rising price pressures for ROV systems, a trend further
bolstered by operators using "extra ROV units for redundancy purposes
. . . (as) . . . time lost due to ROV failure can be economically
disastrous."
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