September 16, 2008
Tulsa-Based Select Engineering Targets Two Fields for Growth
By Kirby Lee Davis
The fast-growing Tulsa firm Select Engineering is expanding into two fields that could boost its revenues 40 percent.
Select recorded $3.6 million revenue in 2007 with 90 percent of its business serving Williams, Enogex and several other energy companies, about two-thirds of that involving maintenance projects. Founder Scott Hastings foresees reaching $5 million or more this year.
His five-year goal to double or triple in size rests on two revenue streams: fabricating custom equipment and penetrating the refining sector.
While Select has made in-roads in both areas, Hastings intends to add 20 or more employees over the next year to grow those offerings.
Adding equipment-design capabilities builds on Select's current maintenance work focus by providing built-to-order parts. Hastings said Select would take its designs to a subcontractor for construction, then oversee installation and instruction needs.
Over the next three to five years, he hopes to grow that service to 20 percent or more of Select's revenue stream.
Hastings' refining goal extends a niche where Select has charted success with Sinclair, Coffeeville Resources and others, representing about 15 percent of its current revenue. By reaching out to other refiners and building on its existing relationships, Hastings intends to build this area to 25 percent or more of company revenue within two to three years.
Both initiatives aim for ripening opportunities. With worldwide demand for fossil fuels surging, companies like Williams and Oneok have not only increased efforts to secure new oil and natural gas sources, but spent millions on new pipelines, processing stations and storage facilities. Refinery operators like Sinclair and ConocoPhillips have moved to either boost their operating capacity or build new facilities.
McGraw Hill and other construction analysts estimate U.S. energy companies will dedicate several billion dollars to refinery and pipeline construction and renovation over the next five years. Producers and suppliers in the Middle East, China and other regions may equal or exceed that.
While this should dramatically increase the amount of oil, gasoline and natural gas hitting the marketplace, increasing commodity price volatility, Hastings joins with other analysts in expecting the growing global economy to absorb those supplies - providing increasing business for suppliers like Select Engineering.
"The industry as a whole, they're used to volatility," he said, doubting that would imperil any operators.
Before starting Select in 1999, Hastings worked for T.H. Russell Co. and Davy McKee Corp. as a natural gas processing plant mechanical and project engineer. That experience, and his desire to build a company, led him to found Select with a focus on energy company maintenance or upgrade contracts.
"When you're working on a $200 million project," he said of his competitors, "it's hard to pull people off for a $2 million project."
That's where Select comes in, targeting projects of $20 million or less. By building a reputation in that work, Hastings said Select is often able to land the contract without going through an expensive bidding process.
After surviving the 2000 telecom plunge and 2001 recession - "we were living on a shoestring budget," he said - his one-man company hired its first employees in 2003. Select hit an explosive stage two years later, leaping from nine to 27 workers.
"Oil prices were going up," Hastings said. "We were jumping in with both feet."
Select now employs 34 in 14,000 square feet on the sixth floor of the Mapco Plaza, offering spectacular views of the Arkansas River and Midtown Tulsa's urban forest.
With a growth rate of 700 percent, this month Inc. ranked Select No. 455 among the nation's fastest-growing private companies. Select placed 18th among energy firms and second among Oklahoma companies.
"We've made the list two years in a row," Hastings said. "Not many companies can say that."
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Originally published by Kirby Lee Davis.
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