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Global: No to further price cutting in U.S. GOM rig market
Ray Tyson Petroleum News Houston Correspondent
Oilfield service company Global Industries, which lost a chunk of money in the 2004 first quarter because of sagging rig markets, says it will no longer slash prices in the U.S. Gulf of Mexico just to satisfy operator demands and their “often onerous terms and conditions.”
In a letter to its customers, Global said that due to the depressed market and operator pressures, it decided to restructure company operations and bidding practices in the U.S. Gulf. Details were not disclosed.
“As our market indicators reflect continued lack of near-term offshore construction opportunities, we must take … measures to ensure reasonable levels of profitability,” William Dore, Global’s chief operator officer, said June 8.
Global Industries provides pipeline construction, platform installation and removal, diving services, and other marine support to the oil and gas industry in the Gulf of Mexico, West Africa, Asia Pacific, the Mediterranean, Middle East and India, South America, and Mexico’s Bay of Campeche. Down 10 rigs from a year ago in Gulf The number of drilling rigs operating in the U.S. Gulf stood at 95 during the week ending June 11, down 10 rigs compared to the same period last year. In contrast, the number of land rigs operating in the U.S. stood at 1,070, up 122 rigs versus the year-ago period.
Global already has transferred assets from the U.S. Gulf of Mexico to the Bay of Campeche and the Mediterranean, and the company said it would continue to redeploy assets as markets warrant.
For one, Global said it plans to submit rig day rate proposals in response to construction tenders and would selectively respond to lump-sum tenders.
Additionally, the company said it consolidated its shallow-water pipe laying division, relocated the division to Carlyss, Louisiana, and released “significant office staff and field personnel.”
However, Global’s diving and liftboat operations remain unchanged and based in New Iberia, Louisiana, the company said.
“We wish to thank those operators who are currently in support of ensuring the stability and availability of the construction industry,” Dore said. Took big hit in first quarter Global took a significant financial hit in the 2004 first quarter, reporting a net loss of $8.3 million or 8 cents per diluted share. That came on the heels of a $1 million loss in the 2003 first quarter.
Revenues for the 2004 first quarter took a bashing, plummeting 43 percent to $84.8 million from $148.9 million for the same period a year earlier. The company said quarterly results were impacted by reduced activity in all of its operating areas except Latin America.
However, during the first four months of 2004, Global said it booked about $300 million of new work and that its backlog at April 30 was approximately $285 million compared to $146.9 million on the same date a year earlier.
Dore told analysts in its quarterly conference call that the company “was making many positive changes in our organization, which include streamlining operations and enhancing project execution.” He said the company expected to return to profitability in 2004.
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