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)
Technip received instructions from Anadarko Petroleum Corporation to begin the engineering, construction and transport of a 23,000-ton Truss Spar hull for their Heidelberg field development. This field is located in the US Gulf of Mexico, at a water depth of 1,620 meters (5,310 feet).
The Letter of Intent allows Technip to begin construction work on the project and other early works including purchase of long-lead items for the hull and start of fabrication, in advance of the expected project sanctioning around mid-2013, after which it will enter into Technip’s backlog.
The Heidelberg Spar will have a capacity of more than 80,000 barrels of oil and 2.3 million cubic meters of natural gas per day.
Technip’s operating center in Houston, Texas will provide the overall project management and engineering. The detailed hull design and fabrication will be carried out by Technip’s construction yard in Pori, Finland where most of Technip’s Spar projects have been manufactured.
David Dickson, Technip’s Senior Vice President, North America Region, has declared: “Technip is really proud to have received this Letter of Intent. Not only does it strengthen our long-lasting relationship with Anadarko but it also confirms its continuous trust in the Group’s extensive know-how and expertise in Spar technology. After Lucius, awarded last year and currently being built in our yard in Pori, Heidelberg will be the 8th Spar delivered by Technip to Anadarko.”
The Heidelberg Spar will be the 17th delivered by Technip (out of 20 worldwide) and thus demonstrates the Group’s leadership for this kind of floating platform and ability to tackle ultra-deepwater developments. It also confirms Pori’s track record expertise and great capabilities to deliver state-of-the-art platforms.
This week the SubseaIQ team added 0 new projects and updated 14 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.
Asia – SouthEast
Maleo MOPU Recevies TLC
Nov 8, 2012 – SOV Windermere (subsea operations vessel) has been contracted to provide offshore support services in the Maleo field in East Java’s Madura offshore PSC. Hall Marine, the vessel’s owner, indicated the operation is centered around the Windermere’s integral 15-man saturation diving facility. The crew of the vessel will be engaged in facility inspections as well as repair and maintenance operations. Maleo is produced via a six-wellhead platform and a jackup converted to a Mobile Offshore Production Unit.
Nov 6, 2012 – Thailand’s Department of Mineral Fuels, Ministry of Energy has formally approved the transfer of 50% participating interest in the G2/48 concession from Pearl Oil to Rayong Offshore Exploration Ltd. The concession lies in proximity to the Jasmine and Manora oil fields and also contains the Rayong Basin which possesses similar characteristics to nearby basins with known oil accumulations. An exploration drilling program is in the advanced stages of planning with the Anchan-1 and Sainampueng-1 wells scheduled to spud 4Q 2012. These wells will satisfy the 5- and 6-year concession commitments respectively.
Project Details: Sainampueng
Nov 7, 2012 – TD has been reached in the Ioana-1 well in the Romanian sector of the Black Sea. Gas shows were encountered in the Sterling Resources-operated well from 1,640 feet to the total depth of 6,397 feet. The main objective identified by 2D seismic was encountered as prognosed but was found to be made up of thinly bedded sands within low permeability siltstones. Shallower gas bearing sands were intersected but formation details won’t be known until cased-hole logs are thoroughly reviewed. Sterling indicated that it might seek to acquire 3D seismic data over the area to gain a better understanding of the complex formations encountered while drilling Ioana.
Project Details: Ioana
N. America – Mexico
Nov 9, 2012 – Pemex awarded an EPCI contract to Sea Trucks for work to be done in the Akal field offshore Mexico. The project calls for the extension of topsides of four platforms including processing equipment with associated piping and fire, gas, electrical and control systems. Field infrastructure will also be upgraded by the addition of subsea pipelines, pig launchers/receivers, spools and risers. No definite timeline has been released but the company says the work will take place in the first half of 2013.
Project Details: Cantarell
Asia – Far East
Nov 6, 2012 – Roc Oil, operator of the WZ6-12 development area in the Beibu Gulf, successfully drilled its second exploration well to a total depth of 8,720 feet. Well WZ6-12-A6 intersected almost 200 feet of net oil pay through multiple hydrocarbon bearing zones in the Weizhou formation and will be completed as a producer. Results of the well have confirmed the extent of the WZ6-12 South field. The third well in the three well exploration program, WZ6-12-A7, is underway and will survey the Sliver and Liushagang prospects to the north of the field.
Project Details: Beibu Gulf
N. America – US GOM
Nov 9, 2012 – Shell awarded another Gulf of Mexico development contract to Technip for the development of infrastructure for the Cardamom field in Garden Banks block 427. The project consists of a subsea tieback to the Auger TLP at a water depth of 2,720 feet. Under the contract, Technip will provide project management, engineering, fabrication and installation of 8 miles of pipe-in-pipe flowlines with associated line terminations and steel catenary risers. Offshore installation is planned for the second half of 2013. The company has not disclosed the value of the contract.
Project Details: Auger
MidEast – Persian Gulf
Nov 6, 2012 – Iranian Offshore Engineering and Construction Company successfully built and installed the 2,320-ton production deck for South Pars A17 platform. From engineering to installation, the entire project took just over 4 years to complete. Production will begin in about 3 months when final commissioning is complete. The unit has the capacity to produce 500 million cubic feet of gas per day. Construction of the production deck for the A18 platform is 90% complete. Completion of the two platforms will be a milestone for phases 17 and 18 in the South Pars development.
Project Details: South Pars
Nov 5, 2012 – New Zealand Oil & Gas announced 2P reserve estimates for the Cosmos Concession, offshore Tunisia, have increased from 6.3 to 8.8 million barrels of recoverable hydrocarbons. The 40% increase is attributed to a resource evaluation completed by InSite Petroleum Consultants Ltd. Two other independent assessments have garnered similar results. A final investment decision from the Cosmos partners is expected in early 2013. Storm Ventures International operates the license with a 40% stake. NZOG and state-owned oil company ETAP hold 40% and 20% stakes respectively.
Project Details: Cosmos South
Europe – North Sea
Europa Eyes Irish Atlantic Margin Prospects
Nov 9, 2012 – Europa Oil and Gas has identified two previously unknown prospects, Mullen and Kiernan, in the South Porcupine Basin in the Irish Atlantic Margin. Both prospects are located in the company’s 100% owned Licensing Options 11/7 and 11/8. First pass seismic data has been reprocessed over Mullen while reprocessing is on-going over Kiernan. Resource estimates at Mullen range from 66 mmbo (P90) to 1092 mmbo (P10). Both prospects are characterized by Early Cretaceous turbidite reservoirs which, although proven in the North Porcupine Basin, are untested in the south. Results from the upcoming ExxonMobile Dunquin well may help to de-risk the area. Europa is currently looking for a joint venture partner to assist with maturing the prospects to drillable status.
Nov 9, 2012 – Subsea 7 is the winner of a subsea compression contract for the Statoil-operated Gullfaks C production facility. At almost $70 million the contract provides for the engineering, installation and commissioning of a 9.5 mile integrated power umbilical, a protection structure, a subsea compressor station, pipeline spools and tie-ins. Work will begin immediately at Subsea 7’s Stavanger office with offshore operations scheduled to begin in 2015.
Project Details: Greater Gullfaks Area
Nov 8, 2012 – GDF SUEZ, through its design contractor AMEC, awarded a $1.9 million contract to Proserv to design, engineer and build wellhead control panels for the Alpha and Bravo platforms at the Cygnus project in the UK North Sea. Proserv will also provide an umbilical termination unit that is integral to the control of the isolation valve fitted to the subsea export pipeline. Six of the ten development wells associated with the platforms will be controlled through the initial panel design. Work is already underway on the project and equipment is scheduled for delivery in 2013 and 2014.
Project Details: Cygnus
Chevron Takes The Helm in West of Shetland Probe
Nov 7, 2012 – Chevron has been given consent by the UK Department of Energy and Climate Change (DECC) to drill the West of Sheland Cambo-5 well on behalf of Hess Limited, the operator of block 204/5a. Cambo-5 will be drilled by a drillship in 3,576 feet of water but the vessel chosen for the drilling program has yet to be named. As part of the approval process, the DECC has thoroughly reviewed Chevron’s management systems and emergency response plans and inspected the drillship that is to be used for the well.
Nov 7, 2012 – Diamond Offshore’s Ocean Vanguard (mid-water semisub) drilled another successful well in the Johan Sverdrup discovery area. Well 16/2-14 was drilled almost 4 miles northwest of Johan Sverdrup discovery well 16/2-6. The main objective was to collect data from the stratigraphic sequence above the reservoir to serve as the basis for field development decisions. A 98-foot oil column was encountered in Upper Jurassic reservoir rocks that exhibited good reservoir quality. The Hegre and Shetland Groups were encountered but reservoir quality was poor in both. The well was drilled to a total depth of 6,430 feet and will be permanently plugged and abandoned.
Project Details: Johan Sverdrup
Premier and Partners Come Up Dry at Spaniards East
Nov 6, 2012 – Exploration well 15/21a-60 in the UK North Sea was drilled to a depth of 10,694 feet and plugged and abandoned as a dry hole. The Premier-operated well was designed to test the easterly extent of the Spaniards discovery and encountered 75 feet of Jurassic sands. However, logging revealed the sands to be water wet. A full analysis of the drilling data is required before a final decision on the commerciality of the Spaniards discovery can be made.
Africa – West
Nov 7, 2012 – PA Resources announced work on the Alen field development in Blocks O and I, offshore Equatorial Guinea, is progressing on schedule. The goal remains to achieve first production in the second half of 2013. Fabrication of platform facilities is in advanced stages and installation of flowlines and umbilicals is expected in 4Q 2012. The development will be comprised of a wellhead platform connected by a bridge to a central processing platform. Once on-line, Alen should produce 33,000 barrels of oil per day via three production wells.
Project Details: Aseng
S. America – Other & Carib.
Mapale-1 Yields Gas Offshore Columbia
Nov 8, 2012 – Equion Energia and its partners announced the discovery of gas in the Mapale-1 exploration well in block RC-5 offshore Columbia. The well was spud in August using the West Mischief (350′ ILC). Gas shows during drilling confirmed the presence of a hydrocarbon system and fluid tests and logging results confirmed the presence of dry natural gas. The company will now begin the technical evaluation process in order to determine the potential of the discovery. A second well was scheduled to be drilled but was postponed until after the harsh weather season, which lasts from November through April, passed. Equion serves as operator with 40.56% interest followed by Ecopetrol with 32% and Petrobras with the remaining 27.44%.
- Sea Trucks Secures Subsea Installation Contract in Mexico (mb50.wordpress.com)
- Worldwide Field Development News Oct 27 – Nov 2, 2012 (mb50.wordpress.com)
- Gulf of Mexico: Quest Offshore Sees Bright Future for Deepwater GoM (USA) (mb50.wordpress.com)
- UK: PEMEX E&P and BP to Share Technology, Expertise for Deepwater Well Cap (mb50.wordpress.com)
- USA: FMC Technologies, Edison Chouest Offshore Team Up (mb50.wordpress.com)
For the very first time, remote-controlled machines and an underwater welding robot have installed a new tie-in point on a live gas pipeline, without the pipeline being prepared in advance.
Subsea Hot Tap Video Link
These types of operations can save Statoil lots of money in the long run.
The hot tap installation is the first to be carried out in connection with preparations for Åsgard subsea gas compression in the Norwegian Sea, and thus also represents a milestone for the project. The tie-in point was welded on to the Åsgard B production flowline at a water depth of 265 metres.
After ten days on the field, the hot-tap operation team on board the Technip-owned vessel Scandi Arctic could confirm success in the pioneering operation.
Kjell Edvard Apeland, project manager of the remote-controlled hot tap development in Statoil and head of the operation on the Åsgard field. (Photo: Rune Solheim)
“For a subsea engineer, this can be compared with landing on Mars,” says Kjell Edvard Apeland. He is project manager of the remote-controlled hot tap development in Statoil and head of the operation on the Åsgard field.
Simply explained, a remote-controlled hot tap operation consists of a robot welding a T-piece on to the pipe, while gas is flowing through it. When that has been done, a remote-controlled drilling machine will drill holes in the producing pipeline, with no effect on pressure and production.
“When the compressor module and the manifold for Åsgard subsea compression are installed next year, we will connect the pipeline from these to the hot-tap tie-in point,” says Apeland.
The Åsgard subsea compression project will be realised in 2015, as the first of its kind in the world. Compressors will be installed on the seabed, instead of on a platform. This will improve recovery from the Mikkel and Midgard reservoirs by around 280 million barrels of oil equivalents.
Hot tap technology is a technological breakthrough, and a door opener for developing marginal fields, as well as extending the lifetime of other fields.
The ability to connect anywhere on a pipeline, without stopping production, yields considerable flexibility and significant savings.
Torstein Vinterstø, portfolio manager for subsea compression projects in Statoil. (Photo: Anette Westgård)
“Since we will be connecting a new compressor station on the seabed to an existing pipeline system on Åsgard, it is very beneficial to use the hot tap technology to avoid disrupting production,” says Torstein Vinterstø, portfolio manager for subsea compression projects in Statoil.
“The savings are measured compared with what it would have cost to perform a similar operation, including shutting down production in the pipeline we were working on. This would also have taken much longer than the ten days we spent now – possibly as long as three months,” he says.
The method was developed by Statoil, and there is no comparable technology.
The work to develop the technology started in 1999, and was developed in Statoil’s pipe technology environment at Killingøy outside Haugesund. Statoil’s expertise in tie-in and repair of pipelines is gathered there.
Open and constructive cooperation with our key suppliers has been instrumental in achieving this.
Statoil has already thoroughly tested the hot tap technology, with good results. Remote-controlled hot tap has previously been performed on Tampen Link on the Statfjord field in the North Sea and on the Ormen Lange field in the Norwegian Sea, but then the T-piece had already been installed on the gas pipeline in advance.
- Statoil delays start of Chukchi drilling until at least 2015 (fuelfix.com)
- Norway: Statoil to Order New FSU Unit from Samsung Heavy (worldmaritimenews.com)