Cover story: Seeing value in the Gulf
David Currie, the newly appointed CEO of Proserv, highlights strategic plans and regional expansion during a flying visit to the Arabian Peninsula
It’s been a busy and eventful year thus far for Aberdeen based oilfield services firm Proserv. Early in 2018 newspaper stories suggested it was wrestling with some trying financial concerns and was mulling several radical options to move forwards, but by the spring, the company had apparently turned its situation around. New backers and a major capital injection had vastly reduced the firm’s debt.
Two months ago, the firm also appointed a fresh CEO as part of its reorganisation. Against this backdrop, Proserv’s new decision-maker arrived in the Arabian Gulf to make a whistle-stop trip to the region. The Gulf is an increasingly significant market for Proserv, which has a presence in several locations in the Middle East including Dubai, Abu Dhabi and Dammam.
David Currie is an industry veteran with the likes of JDR Cable Systems, where he was also CEO, Norway’s Aker Solutions and a 30-year stint at FMC Technologies on his CV. His background has largely been senior management roles at offshore and, most recently, subsea experts – segments in which Proserv has a significant presence.
In recent years, the firm has acquired a portfolio of subsea specialists that now come under the Proserv umbrella, such as Weatherford Subsea Controls back in 2012 and, most recently, Nautronix in 2015. The Scottish outfit offers a range of services and solutions, supporting drilling operations, as well as surface production and decommissioning, including for the growing renewables sector.
But Currie is clear as to what Proserv’s main area of expertise is, stating the firm is “first and foremost, a controls company, a technology company” with two main growth areas, namely subsea controls and production controls. Proserv also has a subsea services business, which incorporates its decommissioning activities.
“We provide leading edge technologies to our customers to make them more successful. That’s where we invest our time and money and that’s what the future of the company is based around.”
According to Currie Proserv is “amongst the world’s leaders in subsea control systems in both brownfield and greenfield.” One of the company’s other core strengths is onshore and offshore topside controls – and that is led from its Middle East base in Jebel Ali, Dubai.
Proserv’s control systems enable operators to monitor the efficiency of equipment and processes, such as well performance. In the subsea segment, the firm has developed its Artemis 2 electronics module that offers monitoring, controls and communications capabilities.
The firm has developed around 250 subsea control modules for its global clients and these have been designed to be operable in deep water down to more than 3,000 metres if required. They are deployed either by divers or remotely operated vehicles.
It is likely that Proserv will announce further restructuring around its key business units later this year.
The global topside controls business would then be managed directly from its Middle East hub, where, according to Currie, “the preponderance of our focus is”. It is likely that by 2019 Proserv will roll out further solution “offerings” in its topside controls division to strengthen the firm’s position in the market.
Currie is quick to stress his excitement about the company’s prospects in the Middle East. In 2017, an 1,800 square metre facility was opened in its main Saudi Arabian base at Dammam, while significant contracts were also landed last year in the kingdom, “Within the next six to nine months timeframe, we will be looking at the next level of expansion within Saudi. It will be, in my view, significant. We have the opportunity to grow that business from what it is today.”
Andy Anderson, Proserv’s region president, Middle East & Africa is also keen to point out that, while Saudi Arabia currently remains the Scottish firm’s largest market, it also has other major deals in the Gulf.
“We’ve got a contract with the national oil company in Abu Dhabi where we go offshore, we survey what they’ve got and then we upgrade it, repair it or replace it. What’s key in that contract is our last option is to replace it. So what we’re saying to the customer is instead of ‘we want to sell you more trinkets’, is ‘why can’t you upgrade or repair the ones you’ve got?’”
Proserv has recently developed a software tool known as the Asset Enhancement Global Intelligence Solution (AEGIS), which helps clients maximise the returns from their equipment by monitoring the service status, and maintenance needs, of platform and subsea components. Anderson reveals Proserv is currently contracted not only by oil major ADNOC but also by Saudi Aramco to carry out this service offshore.
The firm’s expanding footprint in the Middle East has meant that the company is beginning to outgrow its own facilities and infrastructure. Proserv opened a service centre in Abu Dhabi three years ago and already needs to replace it. Currie is evaluating the feasibility of establishing a facility in the Mussafah industrial area on the outskirts of the UAE capital.
But while the present trajectory would seem optimistic, the last few years were challenging for Proserv as it sought to shrug off financial difficulties. Currie is frank about an issue that many oilfield service providers across the globe had to face as the oil price collapsed in 2014, “The generic situation in the market was what drove Proserv to have a tough two to three year period without a doubt.”
The firm’s new CEO doesn’t want to linger on the past and emphasises that period is “now behind us, we have a new ownership model, we’re now debt free.” Through a debt-for-equity arrangement, KKR and funds managed by Oaktree Capital Management have now become Proserv’s owners and a total of $50mn has been injected into the firm.
When Currie took over he stressed his view of Proserv as an “innovative player” and highlighted how he wanted to create a “sustainably better company”. He and the firm’s upper management have been swift to mark out strategic road maps for the next three to five years. These will be fine-tuned before being communicated internally and also to the company’s customers.
When asked about the possibility of another damaging downturn, Currie backs a detailed, clearly communicated strategy, and an effective business model, to provide insulation against future volatility. The CEO is also looking to principles similar to those applied by some of the region’s NOCs, such as Petroleum Development Oman, which has utilised ‘Lean’ business tools to help streamline its operations and reduce waste. The basic purpose of this strategy is to boost value for customers while utilising fewer resources.
Currie is keen to target efficiency as a first priority even as Proserv’s increasing business activity in the Middle East suggests further expansion is feasible. “First, before we start thinking of growing, how do I put into my organisation that continuous improvement – ‘Lean’, ‘efficiency’ - that can make me better for my customers? I’d rather do that now than when I expand.”
But Proserv is attuned to the realigned outlook of cost conscious operators since the upstream industry started to emerge from the challenging oil price scenario 18 months ago. The firm’s first question to clients in the region is “why do you want to replace it, is there a need to replace it?” as it responds to the current ‘doing more with less’ philosophy that exists.
Both Currie and Anderson strongly back their locally based resources to get a job done, from the consultancy stage through to manufacturing equipment, rather than “flying in expats from wherever,” thus addressing the problem of greater potential expenses and time delays.
Current industry trends for prudent operators are directed towards optimising and extending the life of assets, while seeking tried and tested, even standardised, solutions when they plan to expand or develop new projects.
AEGIS, for instance, is a tool specifically geared to enabling operators to keep on top of their maintenance and servicing needs and data, which fits well with the increasing emphasis that many firms are giving to implementing operational excellence policies. Currie suggests Proserv has developed telemetry and supervisory control and data acquisition (SCADA) systems, which can monitor and control field operations across widely dispersed infrastructure.
“We have the capability to enter existing installations with our technology that would enable a customer, as one of the tools that they could use, to optimise their assets.”
Proserv’s company-wide ethos is based on “ingenious simplicity” and the Scottish technology service provider uses standardised, field-proven technologies, but then adjusts and augments, if necessary, to deliver bespoke solutions.
Proserv exemplifies that through its Smart Box technology. After receiving feedback from one of its clients in the region, the firm developed a means of monitoring the performance of wells situated in challenging, remote desert locations, beyond wireless and SCADA networks.
The Smart Box is an intelligent device with an inbuilt GSM modem that collects information from production equipment at the well site, then transmits alerts, or regular status updates, such as “I’m OK”, “I’m unwell” or “I’ve broken down,” to personnel via GSM straight to a mobile phone.
Currie is particular about the bespoke engineering approach and stresses, “repeatability, reliability, quality - all those things are trademarks of what we want to be.” He adds, “We don’t take an innovative solution and prove it with the customer – we prove it ourselves and then we can package for a customer and we’ve got the engineers, the production people, the field experience people that can tailor our innovative technology around standardised solutions. So we give them that innovation ability but within a proven package.”
The firm has been gradually enlarging its presence in the Middle East with its facility in Dammam and its future plans to increase its operation in Abu Dhabi, but the CEO is keen to point out that Proserv’s progress in the former has gone hand-in-hand with a strategic commitment to instigating an in-kingdom total value add programme (IKTVA) and embracing local skills and talent.
“I think what we’re doing in Saudi Arabia is really impressive - the facility we have today, the customer links we have today. But I was also hugely impressed by how the team has built that business. We have a preponderance of Saudi employees that are of a high calibre, that we have development and training plans for, that they are engaging with – to such an extent that, already, we have started a graduate recruitment programme of local Saudis.”
Proserv is targeting long term “growth scalability” through its policies in the kingdom and at the present time around 70% of the employees at its Dammam facility are Saudi Arabian nationals.
Andy Anderson is passionate about the positive impact the firm’s Saudi intake has had on his team and says graduates have come into Proserv from King Fahd University of Petroleum & Minerals, with locals taking up a wide variety of roles from welders through to graduate engineers and accountants, “right across the sphere.”
He states if a firm sets out a mission statement and wants to be the “best service company in the oil and gas sector in Saudi Arabia”, then the only way to achieve that has to be alongside a Saudi Arabian workforce and a successful IKTVA.
When asked if he can foresee a time when the Dammam operation could potentially be managed and run by an entirely local team, Currie doesn’t hesitate and replies “absolutely, 100 percent”. Training and the empowerment of colleagues and team members is something that David Currie wants to emphasise is intrinsic to Proserv’s identity.
“Any community in which we operate, whether that is Saudi Arabia, or Great Yarmouth or Aberdeen, we want to have a real impact on our local community for the better. That’s basically what corporate policy should be about.”