Opus Offshore is complementing its strengths as a young, dynamic industry player with an international acquisition that puts the business in a prime position within the cyclic oil & gas sector.
As a relatively new player in the global oil & gas industry, the pressure is on Opus Offshore to prove itself to the major market players in the sector, and has taken significant steps to achieving just that through a pivotal European acquisition.
Marketing isn’t always a simple task as a new player in the oil & gas industry, with most major oil companies looking for partners who have been active for at least three years, with a proven track record.
One way to counteract this challenge is to form joint ventures with existing market players; something which Opus has consequently optimised via a new partnership with Norwegian company, Songa Offshore.
The resultant Songa Opus Offshore Drilling venture is an amalgamation of Opus and Songa’s international division, in a move which is set to open a whole new set of doors for the former.
“We purchased Songa International, giving us two older semi submersibles called the Songa Mercur and the Songa Venus, having heard of them through their work in Southeast Asia,” the Company’s Vice President of Operations, Peter Burnett explains. “This gives us the Songa name attached to Opus, as well as a track record of seven years and a fantastic safety record and operational performance.
“When we market ourselves now, we can fall back on their track record, and complement that with the great assets and people that we have here at Opus.”
Songa’s reputation for its successful operations in different regions and harsher environments adds further strings to Opus’ bow, with enhanced sharing of knowledge also stemming from the relationship; all of which is set to be beneficial in marketing this enhanced offering to the wider industry.
INDUSTRY BREAKTHROUGH
This potentially defining acquisition aligns itself with Opus Offshore’s general progression over the past year, with the Company currently on the brink of a major industry breakthrough.
Its four, benchmark, new build drill ships have been a signal of intent for the Company since its inception in 2011, with its Tiger 1 rig delivered on 29 June, 2015 and ready to enter the market this year, and Tiger 2 having the finishing touches put to it in the dock also; both of which are now gearing up for an inevitable rise in the oil & gas market over the next 18 months.
In the meantime, Opus is playing the same waiting game as many other industry players in terms of attaining contracts for new builds, but Burnett is confident that once Tiger 1 is picked up and operational, a snowball effect will occur for future rig uptake to fall into place.
“When we began building the ships the oil prices were very good and if they had remained as they were, we’d have had them contracted without any problems, but these slumps are very cyclic, and will come around again,” he predicts. “It has also played into our hands strangely because we have been able to build these a lot cheaper in China than we would have been able to in Korea or Singapore, so when the market does pick up, our operating and capital costs are lower too.
“We’re ahead of the game in having four rigs ready, so all we need to do is get a contract for Tiger 1, show the market how well they are working and how efficient they are, and then other companies will have to play catch-up, and Tigers 2, 3 and 4 will basically market themselves.”
SIMPLE IS BEST
Finding a differentiator in such a fiercely competitive market is imperative, with a lot of rigs currently sitting and waiting to be activated, and a lot of companies behind those rigs desperate for a return on investment on their products.
For Opus, these differentiators stem from the ability to be flexible and entrepreneurial in making quick decisions and skipping outdated practices to produce the most efficient rigs possible.
“That’s the idea of our new drill ships; they are sixth generation drill ships but we can offer them at third or fourth generation prices,” Burnett notes. “We have equipment on board which is all sixth generation, including features which older rigs simply can’t do.
“The efficiency of the equipment operating on these rigs is also far superior to older ones that we’re competing against price-wise.”
Optimising efficiencies begins in the planning stage and its target regions of operation, ensuring that the rigs are not burning any unnecessary fuel, producing unnecessary emissions, and are moored to levels of deep water that each ship was tailored for.
Burnett adds: “If you’re sitting in the ocean hundreds of miles from anywhere and you’ve got 10,000 feet of water below you and you’re using dynamic position systems to keep you in location, it takes a lot of complicated science and energy to maintain position, as well as a lot of costs.
“We don’t have all that on board. We went for the conventional system which is a very high powered, sixth generation mooring system which allows us to moor and sit there very comfortably regardless of the weather conditions. We also burn as little as 12 tonnes of fuel a day compared to as much as 50 tonnes on ultra-deep water rigs.
“Ultimately, we always look to our motto, ‘simple is best’, meaning we run the systems that are simpler to run, with less costs involved and less emissions also.”
CYCLIC INDUSTRY
Over the first four years of Opus Offshore’s evolution the business has been able to rely on two consistent and core structural facets; its role as a subsidiary of the multibillion dollar Reignwood Group in China, and its use of the Shanghai Shipyard.
Knowing the latter from previous roles within the industry, Burnett was confident that all aspects of the engineering and assembly process could be achieved from this Shanghai base, with the cost factor also more efficient than it would have been in either Korea or Singapore.
Shanghai Shipyard also allows room for further innovation as has been seen through the recent introduction of a new simulator.
Burnett notes: “We have all the experience working out of the shipyard, working with all the equipment that is needed on board, but what we have recently done is purchase a multi-million dollar simulator, built specifically for our drilling systems by guys who work with cyberspace simulators. This allows the worker to sit in an air conditioned room, and train on the simulator, before they go on to the rig.”
Keeping a fixed eye on future technologies, trends and continuous improvements is another benefit that comes more easily to a company like Opus, and with ongoing collaboration and discussion taking place with industry analysts around the world, the business is fully geared up to capitalise when the market becomes more favourable.
Its affiliation with Songa Offshore will further compound its long-term international success, but the priority for now remains to capitalise on the rigs already prepared for operation in its domestic market.
Burnett concludes: “In 12-18 months from now, demand will have picked up and I would hope that both Tiger 1 and Tiger 2 will be contracted. Tiger 3 will then be delivered in the fourth quarter of 2016, with Tiger 4 following in early 2017.
“Our second phase is to build and operate some semi-submersibles, on which we have carried out pretty much all the engineering and just need investment to get these off the ground once Tigers 1 and 2 are working.
“In the meantime, we await the industry to come back, which it will do. This is my fourth cycle and it’s not always fun during the lull, but it’ll come back around again and we are in a great position for when it does.”
