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Interview

Walter Forwood – CEO, San Antonio Internacional, Argentina

The CEO of San Antonio Internacional, Argentina’s leading provider of integrated drilling services and management, gives his outlook on industry challenges, the company’s strategic evolution, and maintaining a leadership position based on heavy technology investments that are safe, environmentally friendly, and good quality.

How would you describe the company’s mission and purpose today?

The main objective that we have is to become the company of reference for our customers in the main services that we provide: drilling, work over, and pulling services.

The main objective that we have is to become the company of reference for our customers in the main services that we provide: drilling, work over, and pulling services. In this regard, we want to meet and overcome all safety standards and operational metrics of the industry. Expanding on the latter, we are heavily investing on keeping our land fleet up-to-date which includes enhancing the capabilities of our rigs thus ensuring satisfactory results.

San Antonio Internacional is considered the largest integrated drilling services provider in Argentina and it has the largest land-based fleet in Latin America. Could you please introduce to our international readers your current key assets in Latin America in general and in Argentina in particular?

Our footprint currently expands across four countries in Latin America: Argentina, Bolivia, Venezuela and Mexico. Nevertheless, our main market is Argentina where we have operations in all the main oil and gas basins of the country such as Neuquén and Golfo de San Jorge.

Our main asset is our employees because they have deep industry knowledge gained through long years of experience as well as through the development plan that we have designed for their performance improvement. Our second most important asset is our fleet, including the constant investment in technology upgrades, keeping it to the best standards. Finally, our third most important asset is our management system, which allows us to monitor and control that the company is actually meeting our targets regarding safety, environment and quality objectives.

The gas industry in Argentina has been really dynamic over the past few years. Since your appointment as CEO in 2013, what has been your main focus?

As CEO my priorities have been changing throughout the years according to the industry winds. In 2013, most of the industries in Argentina were bullish; therefore my main priority was the growth and the development of the company. Nevertheless, in 2014 and 2015 I was more focused on maintaining our footprint rather than keeping it growing as a result of the drop in oil prices and the uncertainties of the presidential elections period. Currently, my main focus is to ensure that San Antonio Internacional is able to successfully go through the Argentinian oil and gas industry downturn, since the industry experienced a decrease of around 30 percent of activity, keeping our profitability by dealing with our employees and industry unions in order to make the business more efficient.

There is a big debate around the productivity and efficiency of the energy industry in Argentina. How is San Antonio Internacional facing this challenge given the strong power of the unions?

We are closely working with the unions in order to overcome this challenge. The way we are angling this is through sharing with them the operational international standards and debating together the different approaches to meet these standards. I have personally felt some improvements as the unions start to understand, that through meeting the international standards and improving our profitability ratios the industry will have more investment power to increase the oil and gas exploration and exploitation activities, which will be translated into more jobs. It is a virtuous cycle where both sides—company and employees—win, but there is still a long way to go.

How are the OFS and E&P companies collaborating to advance towards this productivity and efficiency improvement?

Both E&P and OFS companies are working together to find innovative ways to improve the efficiency of the field operations, keeping the safety and the operative metrics at the highest level. The industry cannot improve its productivity without considering the safety metrics: all the aforementioned levers have to advance in parallel. In addition, this approach has to be also supported by the rest of the stakeholders such as the unions and governments (local, provincial and federal). Lastly, the technology also plays an important role within the industry productivity and efficiency improvement.

The studies on the ground demonstrate that there are enough unconventional resources in Neuquen to fulfill national demand and bring back Argentina to export status. What is the current footprint of San Antonio Internacional in the unconventional scenario?

I am proud to confirm that we were the first ones to help YPF and Chevron in their joint development projects of Vaca Muerta’s basin and we were also the first company to have drilled an exploratory unconventional well in Chubut. Thus, our footprint expands from conventional to unconventional across all the main basins in Argentina.

Expanding on our operational footprint, we currently have operations in Mendoza, La Pampa, Neuquén, Rio Negro, Santa Cruz, Chubut and Tierra del Fuego. Furthermore, we also have some service contracts in the north basins of Argentina. As a result, San Antonio Internacional is the company that owns the largest facilities in Argentina; to serve our customers in the places where they need our services: in their exploitation blocks!

Could you expand on your current and future key investments as well as the rationale behind them?

In the short term we will continue investing in technologically upgrading our drilling rig fleet, which is where there has been significant innovation in the last few years. In this regard, we are in the final process of acquiring two new rigs that will be destined to service customers in the south of Argentina and we have also recently incorporated new rigs from Germany that will be destined to service contracts that we have with YPF in the same basin. Additionally, we have recently incorporated a new rig that is already working with PAE in the Neuquen’s basin. Our investment plan is tailored to assure the highest level of innovation in our region in order to keep our leadership position in the technologic curve of the industry.

What makes you the provider of choice within the integrated drilling services provider industry?

First of all, we have a strong presence across the country, which allows us to satisfy our customer’s needs wherever they have their operations at whatever level that they demand. Secondly, our safety standards and the expertise of our employees are well known across the industry, being a quality certificate for our customers and the benchmark for our competitors. Finally, we align our investment program according to our customer’s expansion strategy, being also their business development lever.

We have a strong presence across the country, which allows us to satisfy our customer’s needs wherever they have their operations at whatever level that they demand.

Looking ahead, how do you foresee your Argentinian operations evolving in the next three years?

In my opinion Argentina will be in a better position than it is currently, nevertheless 2016 and 2017 are going to be tough years for the country in general and for the oil and gas industry in particular. Argentina will positively move towards economic stability and step-by-step will be able to meet international standards.

Focusing on San Antonio Internacional’s future, I am proud to confirm that it is fully capable of meeting all future consumer needs, overcoming industry challenges, and maintaining its leadership position. As a professional goal, I would like San Antonio Internacional to become the largest integrated drilling services company in Vaca Muerta.

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