Energy Services Company Looks Far Beyond U.S. Gulf As It Grows: Moneymakers
By Brett Clanton, Houston Chronicle
Oct. 19–Drilling an offshore well is one thing. All the heavy lifting that comes afterward is another. Whether it’s installing a production platform, laying seafloor pipelines or dispatching divers to repair subsea equipment, Global Industries will take the job. It’s not glamorous work, but the Carlyss, La.-based firm, which is run from Houston, has recently seen its business explode amid a global boom in energy exploration. The company has also benefited from a surge in repair work following the 2005 hurricanes.
Last month, Fortune magazine ranked Global the 10th-fastest growing company in the U.S., partly because of its 48 percent annual revenue growth rate over the last three years. But Chairman and CEO B.K. Chin said he is taking steps now to ensure that the business remains strong well into the future. He spoke with business reporter Brett Clanton.
Q: How big of a factor was hurricane-related work to your growth in 2006?
A: I would say last year the two areas that contributed significantly to our top line and bottom line were Mexico and the hurricane work in the Gulf of Mexico. Of course, you can’t depend on that every year. Once in a while, you do have surprises like that. But you have to run your business based on steady state, based on what is predictable. That’s why we decided to enter Brazil when we’re still doing good. We decided to penetrate the Middle East in a big way. Those are getting us there. So whether there’s Mexico growing to the same extent, we have other regions to support our business.
Q: Is Global pushing into new regions partly because you’re not excited about the outlook in the U.S. Gulf of Mexico?
A: Not really. Where our business comes from is basically where the oil-producing countries are. Our business is the result of when someone finds oil. We are there to build the infrastructure, we are there to build the transportation system so that when you produce the oil and gas, you can bring it to the end-user. So you really want to be in places that are producing oil.
The U.S. is a maturing region because we’ve been producing oil and gas here for 40 or 50 years to the point where the U.S. is a net importer of oil and gas. For us to be successful, we have to be closer to our customers. And our customers are international oil companies and national oil companies.
Q: With most of the world’s proven oil reserves outside North America, do you see a day when Global’s headquarters would move to another region of the world?
A: I don’t think so. Where you have your headquarters is not that critical. Of course, you have to have your headquarters somewhere.
The question is, where is that somewhere that will be seen by the entire world? Right now, I see the U.S. as good, if not better than, anywhere else. And we are an American company. Why not have our headquarters in the U.S.? Anyone you talk to will say Houston is the oil capital of the world, whether you like it or not. That’s where the expertise is, that’s where the support groups are, that’s where a lot of the large major IOCs are located, that’s where the talent pool is, that’s where the technologies are to support our business. And Houston has done a superb job creating that infrastructure for companies to do well.
Q: Global Industries started as a diving company, but how much of your business comes from diving today?
A: In terms of revenue, probably 20 to 30 percent. You can’t continue to be in the same segment and expect the revenue to grow significantly. You could, but you would have to increase your market share. And when you increase your market share in the same segment, you have to forgo pricing. And we don’t want to do that.
So we started off 34 years ago with diving. Then, shortly after that, we diversified into construction work, transportation, installation of platforms and pipelines. Now, we are expanding into engineering, procurement, installation and commissioning work, subsea deep-water repair and maintenance work.
Q: The company had a goal to surpass $1 billion in annual revenue, which you did last year for the first time. What is the new goal? Is it $2 billion?
A: Yes. We’re not satisfied with the status quo. I’m sure that all successful companies are not complacent. We want to continue setting new targets, and the next target is $2 billion. I would prefer not to give you a time frame for hitting it. Internally, we do have a time frame. We definitely want to grow, but we want to grow in a profitable manner. We want to grow in a manner that is sustainable.
brett.clanton@chron.com
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