Category Archives: Well Intervention
Well intervention, workover or ‘well work’, is any operation carried out on an oil or gas well during, or at the end of its productive life, that alters the state of the well and or well geometry, provides well diagnostics or manages the production of the well.
Subsea well interventions offer up many challenges and requires much advanced planning. The cost of subsea intervention has in the past inhibited the intervention but in the current climate is much more viable. These interventions are commonly executed from Light/medium intervention vessels or Mobile Offshore Drilling Units (MODU) for the heavier interventions such as Snubbing and Workover drilling rigs.
Helix Energy Solutions Group Inc. (HLX) is turning into a takeover target after streamlining the company to focus on its expanding operations for offshore oil-well support.
The Houston-based company agreed last month to sell its oil-and-gas unit and earlier exited a pipe-laying business, helping Helix reduce debt and center its operations on deepwater vessels and robotics for well maintenance. The divestments make the $2.2 billion company more appealing to a potential suitor such as Aker Solutions ASA (AKSO) or Technip SA (TEC) that may want to expand in marine contracting, said Capital One Financial Corp.
Helix also may attract other oilfield-services providers, according to Stephens Inc., while Iberia Capital Partners LLC says a rig owner such as Diamond Offshore Drilling Inc. (DO) could be interested. Even after Helix’s moves led to a 31 percent gain in 2012 that beat U.S. energy equipment and services stocks, the company trades at a 23 percent discount to its closest competitor Oceaneering International Inc. based on this year’s estimated earnings, according to data compiled by Bloomberg.
“It’s a cleaned-up company,” Trey Stolz, an analyst at Iberia Capital in New Orleans, said in a telephone interview. “Helix would be attractive as an add-on for existing offshore service providers to immediately get a head start on the well intervention side. It’s the next step forward in further specialization of the offshore equipment.”
Terrence Jamerson, director of investor relations at Helix, didn’t return phone or e-mail messages seeking comment.
Helix, which traces its roots to a group of oilfield divers in the 1960s, evolved into an offshore energy company with operations spanning deepwater construction, oil-and-gas production and well maintenance and repair.
The company in October said it sold off its pipe-laying vessels and in December announced that it had agreed to sell its oil-and-gas unit as part of a plan to shift its focus toward so- called well-intervention services. This business, which encompasses undersea well maintenance, salvage and repair using floating vessels and robotics, is more profitable than pipe- laying while requiring less capital outlays than are needed for exploration and production, Chief Financial Officer Anthony Tripodo told investors during a presentation in November.
The asset sales spurred gains in Helix shares that contributed to the biggest advance last year among the 11 members in the Standard & Poor’s Midcap Energy Equipment & Services Index. The stock closed yesterday at $20.86.
By helping to center Helix’s operations on a single, growing business, the disposals also have bolstered the company’s allure as a potential takeover target, said David Streit, an Appleton, Wisconsin-based equity analyst at Thrivent Financial for Lutherans. The firm oversees about $76 billion in assets, including Helix shares.
“This focuses the company and provides potential acquirers with a much more focused and simpler package of assets,” Streit said in a phone interview. The sale of the oil-and-gas unit “removed the last major impediment to an acquisition. The balance sheet will be net cash positive after the divestiture of the business is complete. And beyond that it’s a very straightforward and clean business.”
Including its current net debt of $589 million, Helix’s enterprise value as of yesterday was 6.64 times its 2013 estimated earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. The multiple for its Houston-based rival Oceaneering International (OII) was higher at 8.64 times this year’s estimated Ebitda, the data show.
“It’s trading at a multiple out of whack with other offshore asset-based service companies,” Iberia Capital’s Stolz said.
In its streamlined form, Helix may appeal to some contractors already operating in deepwater oil fields, Stolz said. The addition would give them a leg up as demand grows for well-intervention services, which use equipment sent down from vessels on the water’s surface to tap into aging wells on the sea floor and boost production.
Well-intervention vessels are in demand because they’re a cheaper alternative to drilling rigs, which have long been the standard and are now able to charge near-record leasing rates due to higher oil prices, Stolz said. The market for well intervention could experience growth similar to the past five years, when the number of aging wells nearly doubled to 3,500, he said.
Aker Solutions, a Lysaker, Norway-based oil-services company with well-intervention operations, could be a potential suitor for Helix, said Joseph Gibney, a Houston-based analyst with Capital One. The $5.8 billion company has a fleet of three deepwater well-intervention vessels, according to its website.
Paris-based Technip, with a market value of $13 billion, also could be a logical buyer because of its experience working in deep waters offering construction and engineering services for oil fields, Gibney said.
Ivar Simensen, a spokesman at Aker Solutions, declined to comment on whether the company is interested in Helix. Christophe Belorgeot, a spokesman for Technip, didn’t respond to an e-mailed request for comment.
Other oilfield-services companies may want to buy Helix to augment their businesses and gain technical expertise, said Michael Marino, an analyst at Stephens Inc. in Houston. Rig contractors such as Diamond Offshore may be interested in Helix as a way to recapture some of the work lost to lower-priced well-intervention vessels, Gibney and Stolz said.
Darren Daugherty, a spokesman for Diamond Offshore, declined to comment on whether the company is interested in Helix.
With Helix now focused on well intervention, the company could look to stay independent or even seek out acquisitions itself, said Todd Smurl, president and chief investment officer of Houston-based Ascendant Advisors.
“It might put them in play down the road but now they might actually be strong enough to be an acquirer as opposed to being acquired,” Smurl said in a phone interview. What’s more, after the stock rose 19 percent in the past month alone, “it’s not the screaming bargain it was,” he said.
Still, Stephens’s Marino estimates the company could fetch $25 in a takeover, a 20 percent premium to yesterday’s close.
“A takeout at those levels doesn’t seem crazy,” said Marino, who recommended that investors buy the stock after Helix announced plans to sell its oil-and-gas unit. “It makes a lot of sense for someone who wants to increase their presence internationally and offshore.”
- USA: Helix Marks Strong Market Demand for Deepwater Well Intervention Services (mb50.wordpress.com)
- Helix Reports Oil Discovery at Wang Well in U.S. Gulf (mb50.wordpress.com)
- Helix Energy Solutions Group Sells Offshore Production Business for $610 Million (gcaptain.com)
- Helix Updates Well Intervention Fleet Backlog (dailyfinance.com)
- Helix disposals create deep-water operator takeover bait (fuelfix.com)
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Canyon Offshore is pleased to announce the return of its M/V Olympic Triton to the Gulf of Mexico. She is scheduled to arrive December 2012 and will be available to assist offshore energy producers with ROV vessel needs ranging from high end construction missions to planned or call out ROV inspections.
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Helix Energy Solutions Group announced today that it has been awarded its initial customer contractual commitments for the Helix 534. The Helix 534was acquired in August from Transocean and is undergoing modifications and upgrades necessary for conversion into a well intervention vessel at the Jurong Shipyard in Singapore. The Helix 534 is scheduled to sail from Singapore during the first quarter of 2013 and after transit to the Gulf of Mexico, is expected to be placed into service in late second quarter 2013. Backlog for the Helix 534 involves work in the Gulf of Mexico and extends into 2016.
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Helix Energy Solutions Group, Inc. announced that it has been awarded its initial customer contractual commitments for the Helix 534. The Helix 534 was acquired in August from Transocean and is undergoing modifications and upgrades necessary for conversion into a well intervention vessel at the Jurong Shipyard in Singapore.
The Helix 534 is scheduled to sail from Singapore during the first quarter of 2013 and after transit to the Gulf of Mexico, is expected to be placed into service in late second quarter 2013. Backlog for the Helix 534 involves work in the Gulf of Mexico and extends into 2016.
Meanwhile, the Q4000 has extended its strong contractual backlog through 2014, with strong customer interest into 2016.
Helix also announced that the Skandi Constructor has also received its initial contractual awards. The Skandi Constructor is a chartered vessel and is expected to enter the Helix well intervention fleet in the spring of 2013. Its initial contract involves work in the North Sea and follows with a project off the eastern Canadian coast.
Helix’s two existing North Sea based well intervention vessels, the Seawell and the Well Enhancer, have been awarded customer contracts into the fourth quarter of 2013.
Owen Kratz, President and Chief Executive Officer of Helix, stated, “The recent contract awards for our two new additions to the well intervention fleet, the Helix 534 and the Skandi Constructor, as well as the growing backlog for our existing fleet, reflects the strong market demand for deepwater well intervention services as well as Helix’s market leadership for these services. Furthermore, customer interest for our newbuild semisubmersible well intervention vessel, the Q5000, remains high. The Q5000 is currently under construction at the Jurong Shipyard in Singapore and is scheduled to enter the fleet in early 2015.”
- Helix Updates Well Intervention Fleet Backlog (dailyfinance.com)
- A Day in the Life of Keith Schultz, Captain of Helix ESG’s Q4000 Well Intervention Rig (gcaptain.com)
- Molly Ryan
- Reporter- Houston Business Journal
The University of Houston has plans to offer the fist subsea engineering graduate program in the U.S.
The local university recently said the Texas Higher Education Coordinating Board approved the school’s proposal to offer a graduate subsea engineering program. The program, which is expected to begin in the fall of 2013, will complement the school’s existing subsea engineering certification program.
UH said it partnered with leading energy engineering companies to create a master’s subsea engineering program with lectures and hands-on software education for subsea systems design.
“UH received tremendous input for both of the subsea programs from industry experts, including Cameron, FMC Technologies and GE Oil & Gas,” Matthew Franchek, founding director of UH’s subsea program and a mechanical engineering professor, said in a statement.
Subsea engineers are expected to design, install and maintain oil and gas drilling and production equipment tools and…
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November 6, 2012-Houston–
NOV’s gift will be used to establish the National Oilwell Varco Computational Engineering Laboratory and to conduct contractual research for UH’s subsea engineering program and NOV.
The computational lab will be used to perform detailed computational calculations on complex subsea equipment that must operate under high-temperature and high-pressure oil and gas conditions that occur in ultra-deep subsea reserves.
The lab also will support the subsea engineering curriculum and students, enabling them to complete capstone design projects using the latest in computational subsea engineering tools.
Recently, UH received the state’s approval to offer the nation’s first subsea engineering graduate program, which will teach the scientific and technical skills necessary to create the first generation of formally trained subsea engineering specialists. UH already offers a certificate program in subsea engineering, which also is the only such program in the United States.
“NOV has made an important investment in UH’s efforts to build a premier graduate program in subsea engineering. We are grateful to NOV for recognizing the value of this ambitious energy initiative,” said Matthew Franchek, founding director of UH’s subsea program and a mechanical engineering professor.
“The subsea engineering graduate program is part of UH’s ongoing efforts to support the area’s energy sector,” Franchek said. “With NOV’s help, this program will produce students with the skills needed to overcome the unique challenges of deepwater exploration.”
The Texas Higher Education Coordinating Board approved UH’s proposal to provide a graduate subsea engineering program, which is expected to begin in fall 2013.
Formed in partnership with the world’s leading energy engineering companies, the master’s program will include classroom lectures and hands-on software education for subsea systems design. Recognized experts in the industry will teach the courses.
Offshore oil and gas reserves are increasingly important sources of energy. Some experts believe that billions of barrels of oil and trillions of cubic feet of natural gas lie within federally controlled waters in the Gulf of Mexico alone. But these massive reserves lie underneath 10,000 feet of water, presenting unprecedented engineering challenges such as freezing temperatures, corrosive seawater and immense water pressure.
A subsea engineer is responsible for the design, installation and maintenance of the equipment, tools and infrastructure used in the underwater phase of the offshore oil and gas drilling and production.
Last year, UH began its subsea engineering certificate program in response to the oil industry’s increasing need for these skilled engineers. It was the first of its kind in the U.S. Subsea engineering typically has not been considered a distinct discipline in the U.S., but a number of universities abroad offer degree programs in the field.
The new subsea graduate program will dovetail into UH’s growing petroleum engineering program, which two years ago established an undergraduate degree program in addition to its graduate curriculum.
About the University of Houston
The University of Houston is a Carnegie-designated Tier One public research university recognized by The Princeton Review as one of the nation’s best colleges for undergraduate education. UH serves the globally competitive Houston and Gulf Coast Region by providing world-class faculty, experiential learning and strategic industry partnerships. Located in the nation’s fourth-largest city, UH serves more than 39,500 students in the most ethnically and culturally diverse region in the country.
- UH to offer first subsea engineering program (fuelfix.com)
- Sea Trucks Secures Subsea Installation Contract in Mexico (mb50.wordpress.com)
- Subsea equipment providers see boom ahead (fuelfix.com)
- National Oilwell Varco sees rig technology sales climb (bizjournals.com)
FMC Technologies, Inc. announced today that it has formed a joint venture with Edison Chouest Offshore LLC. The new company will be based in Houston.
Utilizing the subsea technologies, tooling and expertise of FMC Technologies, and the vessel, port logistics and ROV operations of Edison Chouest Offshore, the new company intends to provide integrated vessel-based subsea services for offshore oil and gas fields globally. Services to be offered by the joint venture include equipment intervention, riserless light well intervention, plug and abandonment and other services. The company’s objective is to provide cost-effective solutions to enhance the customer’s ability to initiate, maintain, and increase production from subsea field developments through efficient operations, innovative technologies and a broad inventory of vessels and tools.
”We are pleased to be working with Edison Chouest Offshore to expand the portfolio of subsea services offered by FMC Technologies,” said Tore Halvorsen, FMC Technologies’ Senior Vice President, Subsea Technologies. “This joint venture will provide integrated subsea solutions to address the growing needs of our customers to increase production and improve field recovery rates.”
”We look forward to working with FMC Technologies on this new venture,” said Dino Chouest, Vice President of Operations, Edison Chouest Offshore. “Their leadership in the subsea market combined with our expertise in marine transportation will bring new integrated technologies and operations to the development of subsea fields.”