Temporary, Short Term Furnished Rentals for the Construction Crew

OV  is the perfect choice for construction professionals or crews who want the comfort of a home-away-from-home atmosphere with the amenities of a hotel.

We maintain corporate apartments and corporate housing throughout North America, Europe, the Middle East, Africa, Asia-Pacific, and Latin America. And although OV caters primarily to extended-stay travelers (30 days or longer), shorter stays are available at select locations.

Our national network of fully furnished corporate apartments, single-family homes, townhomes, and condos makes it possible to house teams in close proximity to one another, as well as to their job site. OV will take care of all the details, including setting up utilities and providing optional housekeeping service.

The Double C Resort, originally designated as a hunting ranch located in Crystal City Texas, is situated at the front door of the Eagle Ford Shale region.  The facility was purchased in 1998 and continued primarily as a hunting facility through 2010.  The economic influence of the Eagle Ford Shale combined with the cross-over of oil and gas industry hunting clients provided an organic transition into the oilfield lodging business sector.

Crystal City Texas Hotel Alternative - Resort Workforce Hunting Lodge

Eagle Ford Shale Corporate Lodging Cabins

The facility has since progressed from a hunting specific property to a fully developed village community providing close to 300 rooms designated to oilfield housing solutions.  Accommodations range from 4 bedroom lodging units to cottages suitable for a single family or executive living situation, cabins and custom man camps.  The Resort also includes 70 spaces with full RV hook-ups including electric, drinking and waste water service, high-speed internet and satellite TV in guest rooms.

Crystal City Texas Hotel Alternative - Resort Workforce Hunting Lodge

Crystal City Corporate Lodging Village

This unique and fully developed resort provides a remarkable ranch like atmosphere providing observation of exotic wildlife such as Axis Deer, Aoudad Sheep, Wild Turkey, Dove and Blackbuck Antelope.  Located on 165 acres of high fenced ranch land the resort provides a peaceful and secluded environment with options for fishing, hunting and shooting activities. Amenities include fitness facilities, HD media room, ping-pong, heated pool, fire pit, business center, darts, pool table and shuffle board with two restaurants situated directly within the village.

Crystal City Texas Hotel Alternative - Resort Workforce Hunting Lodge

Crystal City Workforce Housing Eagle Ford Shale

Contact OilField Lodging for more information on this  facility and to make reservations.

Make sure to mention “Crystal City Texas Hotel Alternative – Resort Workforce Hunting Lodge”   

 512-263-8488 Direct line 24/7

Key Energy Services Inc. (NYSE: KEG) named Robert Drummond as its new president and COO, effective immediately.

Drummond formerly served as the president of Schlumberger Ltd.’s (NYSE: SLB) North American business unit, and he also held other management positions throughout his 31 years at the company. Drummond also serves as a director and member of the executive committee for the National Ocean Industries Association.

Key Energy CEO Richard Alario will maintain his position with Drummond joining as president.

“Robert is a talented and proven executive with the ideal skill set to manage Key’s operations,” Alario said in a June 22 statement. “Robert has earned a reputation as a highly engaged and knowledgeable leader with a long history of delivering superior operational performance. His industry expertise and strategic skills mesh extremely well with Key’s businesses, and thus, he is very well suited to lead our day-to-day operations.”

Key Energy Services is a Houston-based onshore well-servicing contractor. Earlier this year, it closed service facilities and reduced its functional support staff by 25 percent, as many energy companies made cuts due to the oil slump.

ARTICLE COURTESY OF LAURA FURR
WEB EDITOR – HOUSTON BUSINESS JOURNAL

Photo Courtesy of Kathleen Lavine / Denver Business Journal

Good News For OilField Lodging and Oilfield Services…  Synalloy Reports Double Digit Percentage Increases in Adjusted Net Income and Adjusted EBITDA for the Second Quarter and First Six Months of 2015

SPARTANBURG, S.C., July 27, 2015 (GLOBE NEWSWIRE) — Synalloy Corporation (Nasdaq:SYNL), a growth oriented company that engages in a number of diverse business activities including the production of stainless steel pipe, fiberglass and steel storage tanks and specialty chemicals and the master distribution of seamless carbon pipe and tube, announces that the second quarter of 2015 produced net sales from continuing operations of $50,163,000, a decrease of $2,525,000 or 5% when compared to net sales from continuing operations for the second quarter of 2014 of $52,688,000. This is great news for the Oilfield Services and Oilfield Lodging Sectors and related services. Net sales from continuing operations for the first six months of 2015 were $101,812,000 which was down 1% or $672,000 from $102,484,000 for the same period of the prior year. For the second quarter of 2015 the Company recorded net earnings from continuing operations of $2,455,000, or $0.28 per share, a 58% decrease when compared to net earnings from continuing operations of $5,783,000, or $0.66 per share for the same quarter in the prior year. Net earnings from continuing operations for the first six months of 2015 amounted to $6,093,000, or $0.70 per share, which represents a decrease of 24% when compared to net earnings from continuing operations of $8,033,000, or $0.92 per share, for the first six months of 2014.

The Company evaluates its financial performance by eliminating all non-recurring, non-operational items from net income and earnings per share. Adjusted Net Income, a non-GAAP financial measure, represents reported income before taxes and eliminates discontinued operations, the effect of inventory gains and losses from changes in nickel prices, lower of cost or market inventory adjustment, aged inventory adjustment, stock option / grant costs, acquisition costs, shelf registration costs, Palmer earn-out adjustment, gain on excess death benefit and retention expense. In addition, recurring operating expenses that are in one period but not in the other are adjusted. Finally, a fixed 34% effective tax rate is applied to all periods to eliminate any income tax effect on operating results. The Company utilizes these non-GAAP measurements to present a more meaningful picture of core operations. The Adjusted Net Income for the second quarter of 2015 was $3,350,000, or $0.38 per share. This represents a 13% increase over the second quarter of 2014 of $2,961,000, or $0.34 per share. For the first six months of 2015, Adjusted Net Income was $6,287,000, or $0.72 per share, up 11% over 2014 results of $5,685,000, or $0.65.

Earnings before discontinued operations, interest expense, change in fair value of interest rate swap, income taxes, depreciation, amortization, inventory loss from change in nickel prices, lower of cost or market inventory adjustment, aged inventory adjustment, stock option / grant costs, acquisition costs, shelf registration costs, Palmer of Texas Tanks, Inc.’s (“Palmer”) earn-out adjustment, gain on excess death benefit and retention expense (“Adjusted EBITDA”), a non-GAAP financial measure, increased $754,000 or 12% to $6,977,000 in the second quarter of 2015, or $0.80 per share. This compares to Adjusted EBITDA of $6,223,000, or $0.71 per share for the second quarter of the prior year. For the first six months of 2014, Adjusted EBITDA was $13,737,000, or $1.57 per share, compared to $12,029,000, or $1.38 per share for the first six months of 2014. This represents an increase of $1,708,000 or 14%.

Oilfield Lodging Encouraged By Synalloy Earnings

Metals Segment

Sales from continuing operations during the second quarter of 2015 totaled $33,943,000, a decrease of $1,889,000 or 5% from $35,832,000 for the same quarter last year. Sales from continuing operations for the first six months of 2015 were $69,404,000, an increase of $211,000 from $69,193,000 for the first six months of 2014.

Storage tank sales decreased 40% and 29% for the second quarter and first six months of 2015, respectively, when compared to the same periods of the prior year. The decrease in storage tank sales for the second quarter and first six months of 2015 when compared to the same periods of 2014 resulted from a fire occurring at the storage tank facility in late April combined with a decrease in demand for their products due to lower oil prices in 2015. The company was adequately insured for the fire and the proceeds from the first business interruption insurance payment were recorded in the unallocated expense section of the income statement. The facility should be 100% operational by the end of the third quarter of 2015.

Incremental sales of pipe and tube products, attributable to the Company’s November 21, 2014 acquisition of Specialty Pipe and Tube, Inc. (“Specialty”) accounted for sales of $4,385,000 and $10,646,000 in the three and six month sales results for 2015, respectively.

Pipe sales from continuing operations decreased 12% and 11% for the second quarter and first six months, respectively, of 2015 when compared to the prior year. The pipe sales decrease for the second quarter resulted from a 4% decrease in average unit volumes and an 8% decrease in average selling prices. In the second quarter, the Metals Segment experienced commodity unit volumes decreasing 17% while non-commodity unit volume increased 16%. Selling prices for commodity pipe decreased approximately 1% while selling prices for non-commodity pipe decreased approximately 21%. The non-commodity price decrease was largely attributable to mix differences between the periods.

The pipe sales decrease for the first six months of 2015 resulted from a 2% decrease in average unit volumes combined with a 9% decrease in average selling prices. In the first six months of 2015, the Metals Segment experienced commodity unit volumes decreasing 5% while non-commodity unit volume increased 3%. Selling prices for commodity pipe increased 5% while selling prices for non-commodity pipe decreased 21%.

The Metals Segment’s operating income from continuing operations decreased 43% to $2,352,000 for the second quarter of 2015 compared to $4,118,000 for the second quarter of 2014. Operating income from continuing operations for the first six months of 2014 for the Metals Segment decreased $1,691,000 or 24% to $5,468,000 when compared to $7,159,000 for the first six months of the prior year. Operating income from continuing operations, which decreased $1,766,000 and $1,691,000 for the second quarter and first six months of 2015, respectively, compared to the same periods of 2014, was impacted by the following factors:

a) The inclusion of the operating results of Specialty in 2015. Specialty accounted for $702,000 and $1,449,000 of operating income for the second quarter and first six months of 2015, respectively;

b) As mentioned earlier, the fire at the storage tank facility in late April, 2015 shut down the fiberglass area of the facility and $480,000 of related business interruption insurance proceeds are included in unallocated costs;

c) Continued low oil and gas prices had an unfavorable effect on sales and profits for our storage tank and carbon pipe distribution facilities.

d) As a result of a continued drop in nickel prices during 2015, the Company experienced inventory losses of approximately $2,322,000 and $3,117,000 for the second quarter and first six months of 2015, respectively, compared to inventory losses of approximately $60,000 and $697,000, respectively, for the same periods of 2014.

During the second quarter, the Company finalized the purchase price allocation for the Specialty acquisition. Additional information was obtained surrounding Specialty’s inventory. As a result, inventory increased and goodwill decreased by approximately $2,318,000. Also, with oil industry demand decreasing, it became evident that Specialty’s projected sales for the first year of acquisition will not result in an earn-out payment. The estimates used to value the earn-out liability at the acquisition date did not take into consideration the impact of oil price fluctuations that ultimately occurred and therefore the beginning earn-out liability and goodwill were reduced by $2,419,000. These adjustments caused goodwill related to the Specialty acquisition to decrease from $5,994,000 to $1,257,000 having little effect on oilfield lodging.
Oilfield Lodging Pipeline TruckingSpecialty Chemicals Segment

Sales for the Specialty Chemicals Segment in the second quarter of 2015 were $16,220,000, which represented a $636,000 or 4% decrease from $16,856,000 for the same quarter of 2014. Sales for the first six months of 2015 were $32,408,000, a decrease of $883,000 or 3% from $33,291,000 for the same period of 2014. Pounds shipped during the second quarter and first six months of 2015 increased 16% and 12%, respectively, from the same periods of 2014 as business ramped up for the BioBased project. Overall selling prices decreased 20% and 15% in the second quarter and first six months of 2015, respectively, when compared to the same periods of 2014 due to in part to:

a) Lower selling prices per pound for oil based products. With the reduction in oil prices, the segment’s raw material costs decreased which resulted in a decrease in selling prices.

b) Our customers supply a large portion of raw materials for certain tolled products. This results in a lower average selling price per pound for their products. The increase in tolled sales where customers supplied the raw materials reduced the Segment’s selling price per pound.

Operating income for the second quarter of 2015 and 2014 was $1,566,000 and $1,715,000, respectively, a decrease of 9%. For the first six months of 2015, operating income was $3,026,000 compared to $3,357,000 for the same period of 2014, which represents a decrease of 10%. The decrease in operating income resulted from lower sales combined with higher repairs and maintenance, utilities, waste disposal and depreciation expenses. Tolled products continue to outperform management’s acquisition projections and had a positive impact on profitability during the first six months of 2015.

Other Items

Unallocated corporate expenses for the second quarter of 2015 increased $190,000 to $1,246,000 (2.5% of sales) compared to $1,056,000 (2.0% of sales) for the second quarter of 2014. For the first six months, unallocated corporate expenses increased $312,000 to $2,266,000 (2.2% of sales) for 2015 from $1,954,000 (1.9% of sales) for 2014. The second quarter and first six month increases resulted mainly from higher professional fees in the following four areas: financial statement audit, tax provision review, tax return preparation and internal audit outsourcing. In addition to these costs, the Company incurred higher stock option/grant costs and salaries in 2015 partially offset by lower incentive based bonuses.

Acquisition costs during the first six months of 2015 represents professional fees associated with the Specialty acquisition.

Interest expense for the second quarter of 2015 was $297,000 compared to $262,000 for the second quarter of 2014. For the first six months, interest expense increased to $657,000 for 2015 compared to $528,000 for 2014. The increase resulted from the additional borrowings associated with the Specialty acquisition. On November 21, 2014, the Company amended its credit agreement to add a $10,000,000, five-year, variable rate term loan with equal monthly principal payments over the life of the loan. The Company’s current credit facility was increased by $15,000,000 to a maximum of $40,000,000 and the maturity date extended to November 21, 2017.

Also, the change in the fair value of the interest rate swap contracts decreased unallocated expenses for the second quarter of 2015 by $183,000 and increased unallocated expenses by $176,000 for the second quarter of 2014. For the first six months of 2015, unallocated expenses decreased by $14,000 for the change in the fair value of the interest rate swap contracts while increasing unallocated expenses by $294,000 for the first six months of 2014.

At the end of the first quarter of 2015, management reviewed the reserve for the Palmer acquisition’s third year earn-out payment and determined that there was no likelihood that the minimum threshold EBITDA target of $5.825 million would be achieved. As a result, during the first quarter of 2015, the Company recorded a favorable adjustment at the parent company level of $2,483,000 to eliminate the remaining earn-out liability. During the second quarter of 2014, management reviewed the reserves for the Palmer acquisition’s second and third year earn-out payments and recorded a favorable adjustment at the parent company level of $3,476,000 to reduce the earn-out liability to the present value of its current estimate.

During the second quarter, 2015, the Company received a business interruption insurance payment for the lost margin associated with the storage tank facility fire. The Company believes that this is a conservative estimate of amounts due to the Company. A favorable adjustment was recorded at the parent company level of $480,000.

Other income represents life insurance proceeds received in excess of cash surrender value for a former officer of the Company.

The Company’s cash balance increased $204,000 during 2015 from $27,000 at the end of 2014 to $231,000 as of July 4, 2015.

a) Net accounts receivable decreased $3,464,000 at July 4, 2015 when compared to the prior year end, which resulted from the collection of a large receivable from a Ram-Fab customer and 8% lower sales in the last two months of the second quarter 2015 compared to the last two months of the fourth quarter 2014;

b) Net inventories increased $2,577,000 as of July 4, 2015 compared to the end of 2014 mainly due to the inventory adjustment for Specialty as noted in the Metals Segment above;

c) Accounts payable decreased $9,391,000 as of July 4, 2015 from the prior year end due to a large purchase of stainless steel in December 2014 to obtain favorable pricing and to support 2015 production demands. Also, accounts payable decreased for the storage tank facility as raw material purchases were scaled back in 2015 due to the fire at that facility; and

d) Capital expenditures for the first six months of 2015 were $2,796,000, of which $1,549,000 was for the tolled chemical capacity expansion.

These items contributed to the Company having approximately $33,902,000 of fixed-rate bank debt outstanding as of July 4, 2015. Covenants under the various debt agreements include maintaining a certain Funded Debt to EBITDA ratio, a minimum tangible net worth and total liabilities to tangible net worth ratio. The Company is also limited to a maximum amount of capital expenditures per year, which is in line with the Company’s current projected needs. The Company is in compliance with all debt covenants at July 4, 2015.

Outlook

The two main factors that affect the Company’s outlook for the remainder of 2015 are low nickel and oil prices.

Nickel prices, which result in stainless steel surcharges, have fallen consistently during 2015 with nickel decreasing 13% during the first quarter of 2015 and 7% during the second quarter of 2015. Our inventory gains and losses are determined by a number of factors including sales mix and the holding period of particular products. As a consequence, there may not be a direct correlation between the direction of stainless steel surcharges and inventory profits or losses at a particular point in time. Our experience has been that over the course of a business cycle, this volatility has tended towards zero. Nickel prices are currently extremely low and it is management’s opinion that they should be near the bottom of the cycle. If this prolonged drop in nickel prices turns in the second half of 2015, we will see a favorable effect on sales and profitability of our pipe manufacturing business.

Lower oil prices affect the demand for products from our storage tank and a portion of our carbon pipe distribution facilities. Should oil prices remain at or continue to fall below their current levels, sales for storage tanks and carbon pipe will be negatively affected in the remainder of 2015. New product lines in our storage tank and carbon pipe distribution operation may help to mitigate any declining sales in existing product lines.

The Metals Segment’s business continues to be highly dependent on its customers’ capital expenditures. Product inquiries have been slow, but are improving, with June’s inquiries being stronger than what was experienced in the past six months. The applications where we see activity include natural gas, chemical and mining.

The storage tank backlog was $9,646,000 at July 4, 2015, $12,229,000 at January 3, 2015 and $11,843,000 at June 28, 2014.

The Specialty Chemicals Segment’s sales should show improvement into the third and fourth quarters of 2015 when compared to the prior year as new business opportunities are being actively pursued. Multiple pending, large volume projects could have a major impact during the third and fourth quarters.

For more information about Synalloy Corporation, please visit our web site at www.synalloy.com.

Forward-Looking Oilfield Lodging Statements

This earnings release includes and incorporates by reference “forward-looking statements” within the meaning of the federal securities laws. All statements that are not historical facts are “forward-looking statements.” The words “estimate,” “project,” “intend,” “expect,” “believe,” “should,” “anticipate,” “hope,” “optimistic,” “plan,” “outlook,” “should,” “could,” “may” and similar expressions identify forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties, including without limitation those identified below, which could cause actual results to differ materially from historical results or those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements. The following factors could cause actual results to differ materially from historical results or those anticipated: adverse economic conditions; the impact of competitive products and pricing; product demand and acceptance risks; raw material and other increased costs; raw materials availability; employee relations; ability to maintain workforce by hiring trained employees; labor efficiencies; customer delays or difficulties in the production of products; new fracking regulations; a prolonged decrease in oil and nickel prices; unforeseen delays in completing the integrations of acquisitions; risks associated with mergers, acquisitions, dispositions and other expansion activities; financial stability of our customers; environmental issues; unavailability of debt financing on acceptable terms and exposure to increased market interest rate risk; inability to comply with covenants and ratios required by our debt financing arrangements; ability to weather an economic downturn; loss of consumer or investor confidence and other risks detailed from time-to-time in the Company’s Securities and Exchange Commission filings. The Company assumes no obligation to update the information included in this release.

Non-GAAP Financial Information

Statements included in this earnings release include non-GAAP (Generally Accepted Accounting Principles) measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures.

Adjusted Net Income and Adjusted Earnings per Share are non-GAAP measures and exclude discontinued operations, inventory gain/(loss) due to changes in nickel prices, lower of cost or market inventory adjustment, Specialty’s aged inventory adjustment, stock option / grant costs, acquisition costs, shelf registration costs, Palmer earn-out adjustment, gain on excess death benefit and retention costs from net income. They also utilize a constant effective tax rate to reflect tax neutral results.

Adjusted EBITDA is a non-GAAP measure and excludes discontinued operations, interest expense, change in fair value of interest rate swap, income taxes, depreciation, amortization, inventory gain/(loss) due to changes in nickel prices, lower of cost or market inventory adjustment, Specialty’s aged inventory adjustment, stock option / grant costs, acquisition costs, shelf registration costs, Palmer earn-out adjustment, gain on excess death benefit and retention costs from net income.

Management believes that these non-GAAP measures provide additional useful information to allow readers to compare the financial results between periods. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results or financial condition as reported under GAAP.

SYNALLOY CORPORATION COMPARATIVE ANALYSIS
THREE MONTHS ENDEDSIX MONTHS ENDED
(unaudited)July 4, 2015June 28, 2014July 4, 2015June 28, 2014
Net sales from continuing operations
Metals Segment $ 33,943,000 $ 35,832,000 $ 69,404,000 $ 69,193,000
Specialty Chemicals Segment16,220,00016,856,00032,408,00033,291,000
 $ 50,163,000 $ 52,688,000 $ 101,812,000 $ 102,484,000
Operating income from continuing operations
Metals Segment $ 2,352,000 $ 4,118,000 $ 5,468,000 $ 7,159,000
Specialty Chemicals Segment1,566,0001,715,0003,026,0003,357,000
3,918,0005,833,0008,494,00010,516,000
Unallocated expenses
Corporate1,246,0001,056,0002,266,0001,954,000
Acquisition costs5,000445,000(3,000)
Interest expense297,000262,000657,000528,000
Change in fair value of interest rate swap(183,000)176,000(14,000)294,000
Palmer earn-out adjustment(3,476,000)(2,483,000)(3,476,000)
Business interruption insurance proceeds(480,000)(480,000)
Other income(134,000)(134,000)
Net income from continuing operations
 before income taxes3,167,0007,815,0008,237,00011,219,000
Provision for income taxes712,0002,032,0002,144,0003,186,000
Net income from continuing operations2,455,0005,783,0006,093,0008,033,000
Loss from discontinued operations, net of tax (1)(5,383,000)(5,856,000)
Net income $ 2,455,000 $ 400,000 $ 6,093,000 $ 2,177,000
Net income per common share from
 continuing operations
Basic $ 0.28 $ 0.66 $ 0.70 $ 0.92
Diluted $ 0.28 $ 0.66 $ 0.70 $ 0.92
Net loss per common share from
 discontinued operations$ —$ (0.62) $ — $ (0.67)
Basic$ — $ (0.62) $ — $ (0.67)
Diluted
Average shares outstanding
Basic8,722,0008,701,0008,719,0008,696,000
Diluted8,735,0008,711,0008,735,0008,705,000
Other data:
Adjusted EBITDA (2) $ 6,977,000 $ 6,223,000 $ 13,737,000 $ 12,029,000
Backlog – storage tanks $ 9,646,000 $ 11,843,000
(1) On June 27, 2014, the Company completed the planned closure of the Bristol Fabrication unit of Synalloy Fabrication, LLC (“Bristol Fab”) and on August 29, 2014, the Company completed the sale of all of the issued and outstanding membership interests of its wholly-owned subsidiary, Ram-Fab, LLC, a South Carolina limited liability company (“Ram-Fab”), to a subsidiary of Primoris Services Corporation. All non-recurring costs associated with these dispositions have been included as discontinued operations in the 2014 consolidated financial statements as part of the Metals Segment.
(2) The term Adjusted EBITDA (earnings before discontinued operations, interest, change in fair value of interest rate swap, income taxes, depreciation, amortization, inventory gain/(loss) due to change in nickel prices, lower of cost or market inventory adjustment, aged inventory adjustment, stock option / grant costs, acquisition costs, shelf registration costs, Palmer earn-out adjustment, gain on excess death benefit and retention costs) is a non-GAAP financial measure that the Company believes is useful to investors in evaluating its results to determine the value of a company. For a reconciliation of this non-GAAP measure to the most comparable GAAP equivalent, refer to the Reconciliation of Net Income to Adjusted EBITDA as shown on next page.
Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA
THREE MONTHS ENDEDSIX MONTHS ENDED
(unaudited)July 4, 2015June 28, 2014July 4, 2015June 28, 2014
Consolidated
Net income from continuing operations $ 2,455,000 $ 5,783,000 $ 6,093,000 $ 8,033,000
Adjustments:
Interest expense297,000262,000657,000528,000
Change in fair value of interest rate swap(183,000)176,000(14,000)294,000
Income taxes712,0002,032,0002,144,0003,186,000
Depreciation1,194,000957,0002,387,0001,908,000
Amortization593,000342,0001,181,000685,000
Inventory loss from change in nickel prices2,322,00060,0003,117,000697,000
Lower of cost or market inventory adjustment127,000(23,000)172,000(11,000)
Aged inventory adjustment(580,000)(190,000)
Acquisition costs5,000445,000(3,000)
Shelf registration costs6,00023,00016,00023,000
Palmer earn-out adjustment(3,476,000)(2,483,000)(3,476,000)
Gain on excess death benefit(134,000)(134,000)
Stock option / grant costs129,00087,000271,000165,000
Retention expense34,00075,000
Adjusted EBITDA $ 6,977,000 $ 6,223,000 $ 13,737,000 $ 12,029,000
% sales13.9%11.8%13.5%11.7%
Adjusted EBITDA per share, diluted $ 0.80 $ 0.71 $ 1.57 $ 1.38
Metals Segment
Net income from continuing operations $ 2,352,000 $ 4,118,000 $ 5,468,000 $ 7,159,000
Adjustments:
Depreciation expense770,000691,0001,542,0001,385,000
Amortization expense564,000323,0001,128,000645,000
Inventory loss from change in nickel prices2,322,00060,0003,117,000697,000
Lower of cost or market inventory adjustment127,000(23,000)172,000(11,000)
Aged inventory adjustment(580,000)(190,000)
Stock option / grant costs32,00011,00063,00021,000
Retention expense34,00075,000
Metals Segment Adjusted EBITDA $ 5,621,000 $ 5,180,000 $ 11,375,000 $ 9,896,000
% segment sales16.6%14.5%16.4%14.3%
Specialty Chemicals Segment
Net income $ 1,566,000 $ 1,715,000 $ 3,026,000 $ 3,357,000
Adjustments:
Depreciation expense402,000245,000804,000479,000
Amortization expense5,0005,00011,00011,000
Stock option / grant costs9,00013,00020,00019,000
Specialty Chemicals Segment Adjusted EBITDA $ 1,982,000 $ 1,978,000 $ 3,861,000 $ 3,866,000
% segment sales12.2%11.7%11.9%11.6%
Reconciliation of Net Income and Earnings Per Share to
Adjusted Net Income and Adjusted Earnings per Share
THREE MONTHS ENDEDSIX MONTHS ENDED
(unaudited)July 4, 2015June 28, 2014July 4, 2015June 28, 2014
Income from continuing operations before
 taxes, as reported $ 3,167,000 $ 7,815,000 $ 8,237,000 $ 11,219,000
Adjustments:
Inventory loss from change in nickel prices2,322,00060,0003,117,000697,000
Lower of cost or market inventory adjustment127,000(23,000)172,000(11,000)
Aged inventory adjustment(580,000)(190,000)
Stock option / grant cost129,00087,000271,000165,000
Acquisition costs5,000445,000(3,000)
Shelf registration costs6,00023,00016,00023,000
Palmer earn-out adjustment(3,476,000)(2,483,000)(3,476,000)
Gain on excess death benefit(134,000)(134,000)
Retention expense34,00075,000
Adjusted income from continuing operations before
 income taxes5,076,0004,486,0009,526,0008,614,000
Provision for income taxes at 34%1,726,0001,525,0003,239,0002,929,000
Adjusted net income from continuing operations $ 3,350,000 $ 2,961,000 $ 6,287,000 $ 5,685,000
Average shares outstanding, as reported
Basic8,722,0008,701,0008,719,0008,696,000
Diluted8,735,0008,711,0008,735,0008,705,000
Adjusted net income from continuing operations
 per common share
Basic $ 0.38 $ 0.34 $ 0.72 $ 0.65
Diluted $ 0.38 $ 0.34 $ 0.72 $ 0.65
Condensed Consolidated Balance Sheets
July 4, 2015January 3, 2015
(unaudited)
Assets
Cash $ 231,000 $ 27,000
Accounts receivable, net25,766,00029,230,000
Inventories70,252,00067,675,000
Sundry current assets7,859,0008,382,000
 Total current assets104,108,000105,314,000
Property, plant and equipment, net40,346,00039,937,000
Goodwill18,513,00023,250,000
Intangible asset, net15,874,00017,002,000
Other assets1,966,0002,346,000
Total assets $ 180,807,000 $ 187,849,000
Liabilities and Shareholders’ Equity
Accounts payable $ 11,997,000 $ 21,388,000
Accrued expenses9,285,00010,150,000
Current portion of long-term debt4,534,0004,534,000
Current portion of contingent consideration4,660,000
 Total current liabilities25,816,00040,732,000
Long-term debt29,368,00027,255,000
Long-term contingent consideration2,396,0002,597,000
Other long-term liabilities7,270,0007,811,000
Shareholders’ equity115,957,000109,454,000
Total liabilities and shareholders’ equity $ 180,807,000 $ 187,849,000

Oilfield Lodging, Corporate Lodging & The Future of Travel Distribution Landscape

Tuesday, July 28 | 8:30am – 9:00am

Look forward and learn from the best when it comes to The Future of Travel Distribution Landscape. These industry experts will be discussing changing consumer behaviors, new technologies and much more as these factors impact the structure and business model of travel distribution on oilfield lodging and corporate lodging.

Moderator

Dorothy Dowling oilfield lodging guest speaker GBTADorothy Dowling
Senior Vice President, Marketing and Sales
Best Western International

 

Dorothy Dowling is senior vice president, marketing and sales for Best Western International. The 20-year hotel industry veteran directs all marketing and sales strategies, overseeing the brand’s loyalty program, consumer and field marketing activities, advertising, public relations and e-commerce.

Since joining THE WORLD’S BIGGEST HOTEL FAMILY® in 2004, Dowling has implemented a number of measures to increase market share and contemporize the iconic Best Western brand. She re-branded the company’s loyalty program to Best Western Rewards®, increased its membership by more than 13 million and more than doubled its revenue contribution percentage to hotels. Under Dowling’s leadership, Best Western has strengthened its strategic partnership with AAA / CAA. For the fifth straight year Best Western has been named AAA/CAA Lodging Partner of the Year. In addition, Best Western also won awards for Best in Marketing, Best in Technology and Best in Service in 2013.

Dowling has also overseen critical user experience improvements to the bestwestern.com booking channel, as well as the launch of its multiple mobile initiatives, including the iPhone application, Best Western To Go®. Under her leadership, Best Western has become a leading hotel player in social media, with the award-winning blog, YouMustBeTrippin.com, and popular presences on YouTube (BestWesternTV), Facebook (BestWestern) and Twitter (@TheBestWestern).

In September 2013 Dowling was named Vice President of the Global Business Travel Association Allied Leadership Council. In addition, she serves on the North American board for the U.S. Travel Association and is a member of the American Society of Travel Agents’ Allied Marketing Council. Dowling is a former chair of the HSMAI Americas Board of Directors, and currently serves on HSMAI’s Global Board of Directors, and is past president of HSMAI Canada. She has been honored with a number of industry awards, including the prestigious American Hotel Foundation Award for Best Practices in Guest Loyalty Programs. Twice Dowling has been listed among HSMAI’s Top 25 Extraordinary Minds in Sales and Marketing.

Before joining Best Western, Dowling held executive-level positions with ARAMARK’s parks, resorts and conventions divisions. She began her hospitality career in Canada after earning a joint Masters of Arts degree in sociology and leisure studies from the University of Waterloo in Ontario. In 2008, Dorothy received that university’s Distinguished Alumni Award.

Panel SpeakersOilfield Lodging at GBTA Global Business Travel Association

Scott V. Alvis
Chief Marketing Officer
Amadeus North America, Inc
As the chief marketing officer for Amadeus North America, Scott Alvis focuses on product marketing, marketing communication, market research, public relations and business planning for Amadeus’ distribution, airline IT and new business efforts in the U.S. and Canada. He is based out of the Chicago office.

Scott joined Amadeus in 2010 as the senior vice president, client managment for airline IT and distribution, where he fostered and managed IT and business relationships with major airlines in the U.S., Canada and Latin America.

A travel industry veteran, Scott previously held several positions at Sabre Holdings, including the president and general manager of SynXis, a technology provider to the hospitality industry. As Sabre’s senior vice president of enterprise marketing, he led its corporate strategic planning, pricing, market research, usability lab and innovation disciplines.

Scott holds an MBA with honors from Cornell University’s Johnson Graduate School of Management and BA in economics from Duke University.

Douglas Anderson
Chief Executive Officer
Carlson Wagonlit Travel

 

Douglas Anderson was named president and chief executive officer of Carlson Wagonlit Travel by the company’s board of directors in April 2008. He joined CWT as executive vice president and chief financial officer one year earlier. He is based in Paris and is a member of the global executive team.

Mr. Anderson is a U.S. citizen with extensive international experience in the Asia-Pacific region and Europe. He spent 25 years at UPS, based in the United States, Hong Kong, London and Brussels. In his most recent position, he was senior vice president, Finance, and chief financial officer, UPS Logistics Group.

He also worked in Geneva as senior vice president and chief financial officer for the SITA Group, the IT and telecommunications service provider to the air transport industry. Before joining CWT, Mr. Anderson was director of finance and business transformation for the Consumer Digital and Film Products Group of the Eastman Kodak Company and was based in Switzerland.

Mr. Anderson is a certified public accountant and holds a Bachelor of Science degree in business administration from the University of Nebraska.

David PavelkoDavid Pavelko
Director, Travel Partnerships
Google, Inc.

 

David Pavelko works directly with Google’s consumer travel initiatives and supports the overall strategy as well as business development and partnership efforts.  Pavelko spent five years as the Head of Travel at Google where he managed marketing and advertising campaigns for airlines, hotel chains, cruise lines, car rental companies, tourism groups, OTA’s, meta, and travel publishers across Google search, display, YouTube and television advertising platforms including oilfield lodging. Prior to joining Google, David spent 6 years at Cendant Corporation where he was vice president of business development and was responsible for developing and managing marketing programs for Fortune 500 organizations for the purposes of leveraging Cendant’s travel (Orbitz, CheapTickets, Galileo), hospitality (Ramada Inn, Days Inn, Super 8), car rental (Avis/Budget), real estate and financial services distribution channels. David also spent time at Choice Hotels in a similar business development and corporate lodging capacity as well as a few years in the sports marketing industry primarily managing sponsorship programs in IndyCar racing. David is a graduate of Princeton University

oilfield lodging attends GBTA 2015

hart energy logoNEWS RELEASE
FOR IMMEDIATE RELEASE

Oilfield Lodging Invites you… Taya Kyle, Wife of the Late “American Sniper,” to Speak at 2015 DUG Eagle Ford Conference

Tara Kyle Speaks @ DUG Eagle Ford 2015 oilfield lodging

Houston, Texas (July 29, 2015) – Audiences met the late Navy SEAL marksman Chris Kyle through thebestselling novel and blockbuster movie American Sniper. His surviving spouse, Taya Kyle will address delegates at Hart Energy’s DUG Eagle Ford conference attended by oilfield lodging .com. She will deliver a keynote message focused on family and patriotism during the networking luncheon scheduled for Monday, October 26 at the Henry B. Gonzalez Convention Center in San Antonio, Texas.

Hart Energy continues to honor San Antonio’s ties to the armed forces by showcasing notable military speakers. Last year, attendees heard from Medal of Honor recipient Salvatore “Sal” Giunta. Since 2010, DUG Eagle Ford audiences also have enjoyed addresses from Robert J. O’Neill, team leader with SEAL Team Six, former Secretary of Defense Robert Gates and Marcus Luttrell, retired Navy SEAL and author of “Lone Survivor.”

The main attraction to the 2015 DUG Eagle Ford conference is its impressive lineup of oil and gas industry speakers.

  • Gregory P. Leveille, Unconventional Reservoirs Technology – Program GM, ConocoPhillips
  • Vance Hazzard, VP Operations – South Texas Asset Team, Pioneer Natural Resources
  • Kirk Spilman, Regional Vice President, Marathon Oil
  • Jeff Balmer, VP & GM – Western Operating Area, Encana Services Company Ltd.
  • Bill Martinez, Vice President – South Texas, Chesapeake Energy Corp.
  • Steve Herod, President, Halcon Resources Corp.
  • Tony Sanchez III, President and CEO, Sanchez Energy Corp.
  • John Brooks, Executive Vice President and COO, Penn Virginia Corp.
  • Ed Butler, Senior Vice President, Stonegate Production Co.
  • Jessica Garrison, Manager – Upstream, Stratas Advisors
Tara Kyle & Purple Heard Recipient Josh Revak oilfieldlodging.com

Taya Kyle & Purple Heart Recipient Josh Revak attend the ribbon cutting ceremony for the Chris Kyle Patriots Hospital.

The 2015 DUG Eagle Ford conference is co-located with Hart Energy’s MIDSTREAM Texas conference. The events share an exhibition and attendees of both conferences will be admitted to the luncheon featuring Taya Kyle. Also, proceeds from DUG Eagle Ford’s 2015 Golf Invitational benefit the Chris Kyle Frog Foundation. This non-profit organization provides meaningful, interactive experiences to service members, first responders and their families, aimed at enriching their family relationships.

DUG Eagle Ford is the world’s largest event focused on unconventional resource development. Set for October 25-27, online registration is now available. Super-early bird pricing expires Friday, August 28. To view the conference agenda, visit DUGEagleFord.com.

Follow DUG Eagle Ford on Twitter @HartEnergyConf #DUGEagleFord @oilfieldlodging #oilfieldlodging

About Hart Energy
For 40 years, Hart Energy editors and experts have delivered market-leading insights to investors and energy industry professionals. The Houston-based company produces magazines (such as Oil and Gas Investor, E&P and Midstream Business); online news and data services; industry conferences (like the DUG™ series); Oilfield Lodging utilizes GIS data sets and mapping solutions; and a range of research and consulting services. For more information, visit hartenergy.com.

© 2015 Hart Energy

Workplace Comfort One of the Keys in Retaining Younger Workforce Offshore – Oilfield Lodging
oilfield lodging and workplace comfort are key

by Valerie Jones, Careers Editor

Offshore and oilfield lodging conditions can be messy, dangerous and grueling at times … we all know that. And so do the thousands of workers who make their living working on offshore drilling rigs as well as the high number of job candidates who are awaiting an opportunity to work offshore. These job candidates are a mixture of industry vets – some who have been laid off in recent months and are anticipating the industry turnaround – and some newcomers attempting to break into the oil and gas industry.

Much has been said in recent years about the Great Crew Change and how it has affected the oil and gas industry. Employers have found themselves in a tough situation: the Baby Boomers of the industry are headed for retirement and the younger cohort of workers (i.e. millennials) will have to fill the gaps. But industry experts complain of a skilled labor shortage and once employers do acquire a skilled workforce, the challenge is then retaining the employees (millennials have been known to hop around).

But how much weight is placed on quality of life while offshore or while staying as a guest in a remote hotel or oilfield lodging? According to a white paper released by Target Logistics titled, “The Great Crew Change: Managing Generational Differences in Oil, Gas, Mining and Construction Workforces,” there is a strong link between workers’ productivity and their work environment. Gen Xers (born between 1965 and 1980) and millennials (born between 1981 and 2000) have characteristics that differ from their older counterparts, characterized in the report as Traditionals (born before 1945) and Baby Boomers (born between 1946 and 1964).

Younger workers, particularly Gen Xers, expect to have a strong work-life balance. Unlike the Traditionals and Baby Boomers, the younger workers “aren’t willing to sacrifice their free time and do whatever it takes to succeed in their jobs,” the report finds. I suppose it would be wise of employers to take heed of this, if they expect the younger workers to stick around.

“Because offshore, by definition, is offsite, the issue of work-life balance will be difficult,” report author Dr. Elaine Cullen, who was a researcher for the U.S. Bureau of Mines and the National Institute for Occupational Safety and Health (NIOSH), told Rigzone.

She said that while workplace comfort is important to younger generations, offshore workers typically understand they’re in a Fly-In, Fly-Out (FIFO) situation and don’t expect luxury accommodations.

“Access to computers, WiFi, etc. will help ease feelings of isolation since this is their preferred way of communicating,” she said. “Younger workers also have a higher need for approval and feeling a part of things, so closer communication and mentoring by supervisors is necessary.”

Workers should be assured that their safety is important to their employer and they should be trained properly to do the work, said Dr. Cullen.

“A combination of perceived unsafe conditions, poor meals and uncomfortable accommodations will help convince [young workers] that this work is not for them.”

A threat to workplace safety, the report said, is when workers are tired, lonely, unhappy or unhealthy. Instead, employers should strive for what Target Logistics refers to as the Economics of Comfort model in . This means that “keeping your workers safe, comfortable, relaxed and well-fed is what keeps them from missing a shift, getting injured on the job, jumping to a competitor or just packing their bags and heading home.”

And the industry certainly doesn’t want that.

RigZone News Oilfield Lodging . Com

Report Publisher: Diana Viola
Project Director: Crystelle Coury
Editorial Coordinator: Alexis Chemblette
For exclusive interviews and more info, please log onto www.energyboardroom.com or contact us at [email protected]

The French hydrocarbons sector, which traces its roots back to the turn of the 20th century, has proven to be resilient, technologically adept and resourceful in finding oilfield lodging and innovative ways to cope with the current crisis.

In recent decades, French oil and gas companies have grown used to market fluctuations, but the current downturn in the oil price has challenged the very fundamentals of the industry, triggered unprecedented structural changes and brought need for reform in the French oil and gas industry front and center.

Patrick Pouyanné, CEO of Total, places the blame for the current slowdown on price fluctuations, the unexpected emergence of unconventional hydrocarbons and competition between various forms of energy. France’s flagship oil and gas company is today actively seeking spending cuts, but as Pouyanné explains, this was not a priority just a few years ago. “While cost-cutting might seem obvious today, it was not the case a few years back. Things had escalated to the point that many in the industry had forgotten that when working with commodities, it’s essential to carefully manage your expenses and your cash break even.” Even France’s IOC has been shaken by the current situation. “Our size may prevent us from collapsing in the short term but we must remain extremely cautious and acknowledge what economic signals are telling us.”

Patrick Pouyanné,
CEO, Total
Thierry Pilenko,
chairman and CEO, Technip

“What clearly distinguishes the current crisis from previous ones is that some of the oil majors have almost immediately initiated a staff reduction,” explains Thierry Pilenko, Chairman and CEO of Technip. “What also differentiates the current situation with the 2009 crisis is the immediate reaction from both IOCs and NOCs.”

“No one had introduced the topic of shale gas before I left Total in 2002,” admits René Bauquis, a prominent geologist and economist. “It had barely started to emerge in the US. When I realized that this new industry was growing, and growing very quickly, it was very unexpected. Of course, shale hydrocarbons were known but we were convinced that these hydrocarbons would forever remain economically unviable to produce.”

While the current slowdown is compelling major French companies to introduce cost-effective solutions, many regret that these measures weren’t adopted sooner. Philippe Crouzet, Chairman of Vallourec, explains that prior to this crisis, the oil and gas sector’s performance data had sent a clear signal indicating a need for reform, which companies initially ignored. Indeed, returns on capital expenditure had drastically diminished long before oil prices started to crumble.

Philippe Crouzet,
chairman, Vallourec
Jean-Georges Malcor,
CEO, CGG

Some French companies were more attentive to market signals. “We were among the first companies to sound the alarm,” says Jean-Georges Malcor, CEO of CGG. “In December 2013, we outlined the details of our transformation plan, which consisted of reducing our footprint in acquisitions and reducing our cost base to become more agile.” When market conditions worsened in 2014, CGG furthered its efforts by reducing its fleet size and cutting its global headcount by 12 percent, drastic measures that Malcor presents as a necessary evil. “The situation paradoxically helped us complete this transformation faster than expected. There has fortunately been positive feedback from the oilfield lodging market.”

While all companies, irrespective of size and position in the value chain, endorse cost-cutting measures, they fail to agree on who exactly should bear the burden.” The dramatic changes occurring in our business environment and their implications to our clients’ cash flows compelled them to enact drastic measures. Their reaction is only natural but they need to seek further cooperation with their contractors to foster a resilient cost-environment.” asserts Thierry Pilenko, Chairman and CEO of France’s leading engineering, construction and project management company Technip.

Some companies have managed to mitigate the effects of the crisis through good portfolio management. “In spite of strong challenges generated by the slowdown, we are entering this difficult period having achieved a record of order intakes in 2014,” reveals Pilenko, “The steps we have taken to broaden our portfolio of solutions have contributed significantly to our solid performance. We won many projects in the subsea world thanks to our complete set of solutions.”

Reactivity and proximity are the new watchwords of Dominique Henri, Chairman and CEO of Heurtey Petrochem, an engineering and project management company specialized in two market segments; process furnaces for refining, petrochemicals & hydrogen production, and natural-gas treatment, through its subsidiary Prosernat. “We capitalize on our new fabrication facilities, project management and engineering offices in India to deliver our services more effectively in Asia and the Middle East,” he explains.

Arnoult Gauthier,
president, SeaOwl

The ability of E&P and EPC companies to drastically reduce costs and introduce internal flexibility has created an unprecedented window of opportunity for ambitious niche players that can assist them in fulfilling this objective: “Our business model consists of enabling oil and gas companies to provide quality at a global level without enduring unbearable costs,” explains Arnoult Gauthier, president of SeaOwl, an asset management and technical assistance company. Gauthier firmly believes that the oil and gas industry cannot afford to be conservative and complacent, and must outsource wherever possible to reduce costs. “For instance, in asset management, we provide integrated services that cover the marine side of FPSOs,” Gauthier explains. “Our role is to assess from a global perspective, which people will be needed in which positions, and where the risks lie in terms of safety.”

GENERATIONS OF UNLOCKING TECHNOLOGICAL BARRIERS

Although France doesn’t have any significant hydrocarbon production of its own, it has nevertheless managed to create an oil and gas industry composed of market leaders in virtually every segment of the value chain. “Very few people know that France is the world’s second largest oil services industry in terms of exports,” says Jean Ropers, the former chairman of the French Association of Companies and Professionals in the oil, gas and related industries, or GEP-AFTP.

Jean Ropers,
chairman 2009-2015, GEP-AFTP

France’s involvement in oil and gas dates back to the end of the First World War. Successive governments recognized the significance of oil and gas as a pivotal resource to win major wars. “In 1924, the French government created an ad hoc company called Compagnie Française Des Pétroles,” explains Daniel Valot, Technip’s Chairman & CEO from 1999 to 2007. “Later on, wishing to monitor its oil supplies more closely, the French authorities enacted a law in March 1928 that gave the French state a monopoly on importing and refining crude oil, but would delegate this monopoly to various French companies.”

The credibility and quality of this French expertise arguably stems from the scientific excellence of engineering schools such as Ecole Polytechnique, and various research institutes and associations have successfully translated this engineering excellence into oil and gas expertise. Olivier Appert, chairman and CEO of IFPEN from 2003 to 2015, the institute that has over the last 70 years accompanied oil and gas companies during phases of radical technological transformation, explains how within the French oil and gas community, IFPEN symbolizes the epitome of innovation and successful R&D. “We are an innovative center, developing products and processes to match the demands of both the industry and society at large. We always have one foot in pure science but keep an eye on commercialization,” Appert explains. IFPEN contributed to the creation of companies like Technip and Coflexip, but also niche market leaders such as Eurecat, a renowned supplier of catalyst processes, and Axens, an engineering company that still conducts research programs in cooperation with IFPEN and develops state-of-the-art technologies, oilfield lodging services, catalysts and adsorbents with optimum performances for the refining, petrochemical, gas and alternative fuels industries.

Olivier Appert,
chairman & CEO 2003-2015, IFPEN

In spite of its rigid labor market and high labor costs, France is home to the research, execution and project centers of several international companies. “Saipem France has become a leading project execution center for Saipem globally,” declares Fabio Pallavicini, CEO of the French affiliate. “Technological development is undeniably critical to our success and explains the importance of our Paris office as a project execution center. We have established lasting relationships with French universities and research centers to develop new technologies.”

Many leading French companies have come to terms with the fact that they can no longer compete with emerging economies on costs, and must focus now on added value: “To remain competitive in the long run, we must remain at the vanguard of innovation in relation to project management and engineering,” declares Antoine Bresolin, CEO of Eiffage Metal. “We are perpetually committed to engineering in steel construction. We seek the brightest engineers. I have one goal for the coming years: excellence.”

Fabio Pallavicini,
CEO, Saipem SA

France has fostered a dense network of small but competitive SMEs dedicated to oil and gas, many of which capitalize on the fact that their technologies and engineering capabilities can allow them to become market leaders in small niches. Doris Engineering is an example of a French company that built on that niche position to great effect, eventually being presented with the OTC award in 2006, perfectly illustrating France’s position as an engineering powerhouse. Nicolas Parsloe, Doris’ CEO, attributes his company’s success to its way of relentlessly seeking to unlock technological barriers. “Our philosophy has always consisted in pushing the limits forward,” he explains, “One of Doris’ fundamental characteristics is that people who work here are passionate and so we are able to take on new challenges when we believe we can address an issue that remains unsolved. Our competent staff that masters the technology to develop projects anywhere in the world remains our greatest asset.” Parsloe insists that the pool of talented engineers available in France has contributed to the company’s success. “R&D has always been at the heart of our philosophy. France is always innovative as French people are very keen on mathematics and physics and take pride in developing cutting edge-solutions. Doris boasts very bright and competent young professionals.”

Nicolas Parsloe,
CEO, Doris Engineering

NO DOMESTIC SAFETY NET

The lack of significant domestic oil and gas production means that many French companies must seek international growth without proving their concept domestically first. French companies operating in the oil and gas industry are therefore experienced in competing in foreign markets where they are not favored as natural partners of choice. Since French oil and gas players cannot rely on a domestic safety net, most of them achieve a substantial portion of their turnover internationally. Prior to earning a global reputation, French companies must build networks and overcome fierce international and local competition without boasting longstanding credentials. Several SMEs have even admitted that risk wasn’t enshrined in their culture and that they sometimes dithered too long before finally entering a market.

“We have already established subsidiaries across the globe but our main objective in years to come is to have foreign companies use our French concepts and technologies,” explains Guy Bardot, founder and CEO of Bardot Group, a mid-sized French company specialized in strategic polymer parts and subsea umbilicals, risers and flowlines (SURF). By 2020, the company aims to grow to USD 100 million based on this model. “We want to duplicate our model to every region of the world, notably the United States and the United Arab Emirates. We decided to seek industrial partnerships with companies in demand of engineering processes and recipe for polymers. We now boast partnerships in the US, Brazil, Europe and Malaysia.”

DeepEnergy – Courtesy of Technip and Jerome Retru

“In our business, we always arrive before or after a revolution. We need to be aware of that without putting ourselves in danger,” says Jean-Claude Bourdon, executive vice president of Dietswell, who recently signed two major contracts in Iraq for its particular niche service of integrated drilling and engineering services. “Even though the country was chaotic and unsafe, I found it had potential,” he says, discussing the challenges of the project. “We ran the operations from our Abu Dhabi office. The best way for us to enter the country was through inspection and technical assistance services.” Bourdon sincerely believes that these bold decisions characterize the oil and gas industry. “We now have constant activity in Abu Dhabi in the commissioning of land rigs coming either from the USA or China or their numerous launching of offshore platforms. From there, we have spread to neighboring countries like Yemen, Oman, Qatar and Iraq.”

Guy Bardot,
chairman, Bardot Group
Jean-Claude Bourdon,
executive vice president, Dietswell

Ludovic Villatte, CEO of ITP Interpipe, a global leader in the design, provision and fabrication of highly insulated pipes, is convinced that preserving his plant in France contributes to his company’s success in the long run. Several French exporting SMEs subscribe to this vision and have received positive feedback from their international clients. According to them, many players in emerging markets consider that the Made in France label constitutes a “pledge of quality,” which serves to explain the commitment of French SMEs to preserve a production facility in France. “We are committed to preserving our manufacturing facility in France because it serves as a center of progress and excellence. Our plant enables us to dispatch qualified equipment and trained engineers across the world.”

France’s historical, linguistic and cultural links to a number of African countries have provided a wealth of opportunities for French oil and gas companies. “We are also convinced that the African continent will constitute our main market of interest according to its forecasted growth levels,” reveal’s SeaOwl’s Gauthier. “A few majors used to dominate Africa. Nowadays, the advent of ambitious national players, with insatiable demands for technical assistance, has opened a considerable window of opportunity for suppliers of expertise and manpower like SeaOwl.”

Small and mid-sized French service providers rejoice every time Patrick Pouyanné expresses Total’s continued commitment to Africa, as partnering with the IOC on projects in African countries allows them to grow and build lasting partnerships with local players. Companies like Krohne, Sofregaz, Eras and SDV Logistics have long admitted that the development of their activities in Africa was the basis of their international expansion elsewhere. Several companies have built on success in Francophone Africa to gradually expand toward Anglophone and Portuguese Africa and seize opportunities in key markets like Nigeria, Angola and Mozambique. Indeed, Doris Engineering recently won an important contract in Angola, while Eiffage Metal has contributed to the OFON project in Nigeria.

SAFETY: BELIEF OR COMPLIANCE?

Cost reduction strategies have not dampened the enthusiasm for continuing to embrace safety as a core value and priority for French companies: the oil and gas industry has witnessed tragic incidents in the recent past, which French oil and gas players have sworn never to repeat, committing to a stringent set of HSE norms and standards, irrespective of size and turnover.

Pouyanné expresses the importance of safety by including it in a list of five words for the future of Total, which urges all its professionals dispatched around the world to respect its safety guidelines and recommendations. “Safety will systematically constitute a permanent key concern for Total,” he observes. “We are aware that nowadays, safety may put the future of a company at stake as we have observed after the tragic Deep Horizon accident in the Gulf of Mexico.” Total recently encountered and addressed serious safety threats in Yemen and Libya. “In Yemen, as rebel forces approached our LNG facilities, we not only cautiously evacuated our expatriates but also our local staff after having safely and orderly shutdown our operations.” Technip’s Pilenko is also keen to explain that safety is no longer compromised or dismissed at the expense of other investments and cost saving. “Safety is a critical component of our success and will never be disregarded or compromised in any economic context.”

Didier Michaud-Daniel,
CEO, Bureau Veritas

Oil and gas companies no longer seek to implement safety measures for the sake of compliance but rather because they are fully aware of the risks implied: “Customers in the past focused on safety to satisfy growing government requirements,” says Thibault Fourlegnie, general manager and EMEA operations director of Oldham, a provider of gas detection systems. “They are now pursuing the highest standards of safety to protect their staff and ensure tranquility during the course of their missions.” Fourlegnie also emphasizes the growing role of support services and maintenance in his business: “On the maintenance side, we have 45 field technicians in France and a trusted network of distributors dispatched across the world. We deliver process control and need to ensure adequate maintenance, operation, inspection and prevention around the products we deliver.”

As safety prevails as a core concern in the oil and gas industry, certification and inspection companies play a growing role in accompanying their clients’ HSE development and compliance. “QHSE is the core activity of our company,” explains Didier Michaud-Daniel, Bureau Veritas’ CEO. “Operators have unanimously expressed their commitment to continue their efforts in this field. The impact of QHSE within the deployment of these projects is undeniable and has encouraged Bureau Veritas to accompany and adapt these new trends and developments in mentalities and business philosophies.”


Half a century of drilling expertise and oilfield lodging

Entrepose Drilling was founded in 1958 as COFOR and has drilled thousands of wells worldwide. The company which belongs to the Entrepose Group, itself part of Vinci, relies on its conventional and automated modern hydraulic rigs to offer its clients a wide spread of solutions for drilling and workover applications. “We invested in the most recent generation of drilling rigs,” reveals David Richard, CEO of Entrepose Drilling. “We therefore improve safety levels via highly automated rigs. Environmentally, they have a smaller footprint and limited noise levels. We foster innovation through the type of rig we select, which in turn address environmental concerns. It is through the rig itself that Entrepose Drilling can really make a difference,” he explains.

David Richard,
CEO, Entrepose Drilling

Recently, the company has decided to leverage its oil and gas drilling experience to specialized niche segments including deep aquifer systems, deep geothermal wells and coal bed methane. “We have built extensive experience in geothermal drilling in France, and have become a leader in that aspect. We are even able to address turnkey wells,” says Richard, before admitting that like most players in the French oil and gas community, Entrepose Drilling had to seek international expansion to sustain its activity. “The market slowdown in Europe encouraged us to seek opportunities both geographically and technologically. Geographically, we are involved in West Africa, India and the Middle East.”


Bridging the gap between global solutions and local proximity

As the oil and gas industry increasingly embraces safety as a core value, certification companies have worked to get as close as possible to their clients. In this respect, DNV GL has built a subsidiary in Paris to work with French clients during the design phase of both domestic and international projects. This strategy is starting to bear fruit: “Until a few years ago, DNV GL didn’t participate in calls for tender issued by Total for classification, but three years ago, we broke this trend by winning an important classification contract on behalf of Total in Congo,” explains Anje Deschoolmeester DNV GL’s manager for oil and gas in Southern Europe, “Since then, DNV GL is regularly asked to present its services and solutions to major French operators and EPCs.”

Anje Deschoolmeester,
manager Southern Europe Oil & Gas, DNV GL

The need for coordinated solutions between subsidiaries is growing increasingly important, according to Deschoolmeester. “We are handling a project for Technip and Total in the North Sea: project management for verification is conducted from Paris, while execution falls under the umbrella of our Danish and Korean offices; risk and reliability management is coordinated between here and Oslo. Our teams must adapt and adopt the culture of every country where we operate. It is critical for us to understand and recognize the specific regulations, customs and requirements in each country.” According to Deschoolmeester, DNV GL’s French entity revolves around safety and risk management systems and reliability studies, while the global group’s competitive advantage resides in its unparalleled investments in innovation and oilfield lodging.

Emerald Oil Enters Agreement With Koch Oilfield LodgingCorporate Lodging and Emerald Oil

Months after Emerald Oil Inc.’s (EOX) Delaware Basin acquisition fell apart, the Denver E&P has entered agreements to sell working interest in the Bakken Shale as well as a possible midstream oilfield lodging joint venture, the company said Aug. 3.

Emerald said it entered a purchase and sale agreement in July with Koch Exploration Co. LLC, a subsidiary of Koch Industries Inc., totaling about $24.4 million. Proceeds will be used to repay outstanding borrowings on the company’s revolving line of credit.

Under the agreement, Koch will acquire a 30% working interest in its undeveloped southern drilling spacing units in McKenzie County, N.D., for $16.6 million. Koch Exploration separately agreed to acquire a portion of Emerald’s undeveloped oilfield lodging leasehold in Richland County, Mont., for $900,000.

Emerald and Koch also entered into a 2016 drilling agreement for two wells in southern McKenzie on two undeveloped drilling spacing units. An area of mutual interest (AMI) has been established as part of the deal so that costs leasehold and acreage acquisitions will be split evenly between the companies.

 

Oilfield Lodging Emerald Oil

Koch will reimburse Emerald for their proportionate 30% share of existing authorization of oilfield lodging expenditures (AFEs) in southern McKenzie.

NEWEST OILFIELD LODGING AND NATURAL GAS EXPORTS TO MEXICO ON THE FAST TRACK…

Just as Space X rockets may be taking off from the beaches at Boca Chica near Brownsville, natural gas exports to Mexico look to also sky rocket in the coming years with oilfield lodging. Due to changes in Mexican law in 2013 opening the electricity market to private investment, billions of dollars in contracts have been let to build power plants, electrical distribution facilities and natural gas pipelines. In turn U.S. pipeline companies and gas producers have moved to capture the lion’s share of that market. Given the fact that Texas and Gulf Coast producers have been rapidly losing their old Northeast and Midwest markets to Marcellus producers this has proven to be a timely and vital new market. The Energy Information Agency (EIA) estimates that natural gas exports to Mexico were 3% of production in April 2015 and are expected to grow to 5% by 2030. While not nearly as important as the domestic power sector to U.S. producers nonetheless it represents a good piece of business.

So just where are these projects crossing the border and linking up to Mexican pipelines? Let’s take a look at recent developments. Last year Kinder Morgan’s (KM) Sierrita gas pipeline went online carrying 1.9 Bcf/day into Mexico. The 36-inch 60-mile line runs from El Paso Natural Gas’s (owned by KM) existing south mainlines near Tucson to Sasabe, AZ before interconnecting to Mexican pipelines at the border. Estimates for gross exports to Mexico are estimated to rise to 4.6 Bcf/d by 2024 and the Sierrita will contribute a fair share of that export capacity. This presentation from Kinder Morgan contains more detailed breakdowns of system oilfield lodging gas pipeline exports to mexicocapacities.

In addition to the newly constructed oilfield lodging near the Sieritta pipeline, KM also has Texas intrastate facilities. Included in the operations of the KM Tejas system is the Morgan Border Pipeline system. Border Pipeline owns and operates an approximately 97-mile, 24-inch diameter pipeline that extends from a point of interconnection with the pipeline facilities of Pemex Gas Y Petroquimica Basica at the International Border between the United States and Mexico in Hidalgo County, Texas, to a point of interconnection with other intrastate pipeline facilities of KM Tejas located at King Ranch, Kleburg County, Texas. The pipeline has a capacity of approximately 300 million cubic feet of natural gas per day and is capable of importing this volume of Mexican gas into the United States or exporting this volume of gas to Mexico.

oilfieldlodging.com texas permian basin  pipeline to mexicoDRILLINGINFO PIPELINE LAYER MAP

TheMier-Monterrey Pipeline, also owned by KM, consists of a 95-mile natural gas pipeline that stretches from the International Border between the United States and Mexico in Starr County, Texas, to Monterrey, Mexico and can transport up to 375 million cubic feet per day. The pipeline connects to a 1,000-megawatt power plant complex and to the PEMEX natural gas transportation system.

Next up are newly announced pipelines, such as Howard Midstream Energy Partners (HEP) June 23, 2015 announcement of the Nueva Era Pipeline, an approximately 200-mile, 30-inch pipeline connecting its existing Webb County Hub to Escobedo, Nuevo Leon, Mexico, and the Mexican National Pipeline System in Monterrey. Expected to be in-service in July 2017, the Nueva Era pipeline, which will be developed in conjunction with HEP’s Mexican partner, will provide seamless transport for up to 600 mcf/day from South

Texas producers directly to end-users in Mexico. San Antonio based HEP said it expects Nueva Era transportation service rates from U.S. – Mexico border to Escobedo to be between US $0.13 and US $0.20 per mcf, subject to the shipper’s required term, level of service, and volume commitment, and pursuant to all Mexican legal requirements. HEP CEO Mike Howard made an insightful commit during the press release stating that “…When you look at the state of Texas, we have about 300,000 miles of pipe in Texas, and in all of Mexico they have about 9,000 miles of pipe. I think the prize is that there are going to be large infrastructure requirements in Mexico.”

Natural Gas Mexico Eagle Ford Shale OilField Locging . ComThe biggest proposed natural gas pipeline project in South Texas is the South Texas-TuxpanPipeline, a 42-inch diameter line that would run 497.1 miles under the Gulf of Mexico from South Texas to Tuxpan, in the state of Veracruz. The pipeline, valued at $3.1 billion, would have 2.6 Bcf/day of capacity and have interconnections with the Nueces-Brownsville and the Tuxpan-Tula pipelines. This pipeline is among the $9.8 billion in gas transport, oilfield lodging and power plant projects recently issued requests for proposals from the Federal Electricity Commission (CFE), Mexico’s state-owned electricity utility. The contract has an expected award date of December 2015 with a start date of June 2018.

In March of 2014 Energy Transfer subsidiary Houston Pipe Line Company received FERC approval to build and operate a pipeline to export or import of gas at the international boundary between Hidalgo County in Texas and the city of Reynosa in Tamaulipas state in Mexico. Houston Pipeline will use existing infrastructure and right-of-way to construct a new 24-inch pipeline from near Edinburg, TX to a new international border crossing near McAllen, TX. While the new 23 mile extension will have a design capacity of approximately 140 mcf/day, the 15 year contract with CFE calls for transportation services of 930,000 MMBtu/day.

In January of 2015 Mexico’s CFE selected a consortium of companies that includes Dallas-based Energy Transfer Partners (ETP) to construct two pipelines in West Texas. The Trans Pecos pipeline would run 143 miles from the Waha natural gas hub near the town of Pecos in Reeves County down to the border town of Presidio, where it would connect with a short 1,000 foot cross-border pipeline connecting toanother line in the Mexican town of Ojinaga. At 42 inches in diameter, it would be capable of moving 1.4 billion cubic feet of natural gas a day. Local opposition has heated up as local residents learned of the construction and while Energy Transfer has an approved T-4 permit from the Texas Railroad Commission compromise may prove difficult.

The Comanche Trail pipeline will be a 192 mile 42-inch pipeline delivering 1.1 Bcf/day, from the Wahahub to the international border at San Elizario, TX, just south of El Paso. The consortium for this project is comprised of Energy Transfer Partners, MasTec, and Carso Energy (owned by Carlos Slim, Mexico’s richest man).

The Roadrunner Gas Transmission pipeline extends from ONEOK Partners’ Wes Tex pipeline system at Coyanosa, TX west to a new international border-crossing near San Elizario, TX. The first phase of the project for 170 MMcf/d of available capacity is expected to be completed by the first quarter of 2016. The second phase, which will increase the pipeline’s

BB---fig-8 natural gas exportsavailable capacity to 570 MMcf/d, is expected to be completed by the first quarter of 2017. The third and final phase of the project is expected to be completed in 2019 and willncrease available capacity to 640 MMcf/d.

That’s three (3) existing pipelines and six (6) proposed pipelines with combined capacity of 6.5 Bcf/d      and representing capital budgets in excess of $7 billion. A lot of pipe and money in anybody’s book especially the oilfield lodging companies.

Mexican Oil Pipeline oilfieldlodging.com

Permian Basin Oilfield Lodging in Mexico

 REFERENCES AND IMAGE SOURCES:

Vice News, , Sasha Von Oldershausen, June 22, 2015.
NGI Shale Gas Daily, , Joe Fisher, June 23, 2015.
Vice News, Mexico Wants to Run a Pipeline Through West Texas, Sasha Von Oldershausen, June 22, 2015.
NGI Shale Gas Daily, Texas-Mexico Pipeline Developer Looks Forward to Gathering Mexican Gas, Too, Joe Fisher, June 23, 2015.
RBN Energy, As We Send Gas Through the Streets of Laredo, Housely Carr, June 30, 2015.
High Country News, Natural Gas Exports to Mexico are Surging, Elizabeth Shogren, July 7, 2015.
El Paso Times, Proposed construction of gas pipelines concerns San Elizario residents, Aileen B. Flores, July 12, 2015.

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