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Interview

with Gary Sims, Area Manager, Expro Norway AS

29.10.2012 / Energyboardroom

When you were given the option to come back to Norway from Southeast Asia, with the market having changed significantly over the past five years, what were your expectations and how does the reality compare?

The growth that Norway sees now has shifted compared to previous years in that there is a lot more activity based on exploration. I think this has been driven through tax breaks that companies are now making use of. In the past, Expro did not really orient its business much around exploration well testing, and now when we look at our order book for the middle of next year, we have a large number of exploration wells planned. While we still have large production well cleanup activity, the significant shift has been mainly with this exploration well testing.

Traditionally, markets like Norway are seen as mature and focus on maintaining market share. In comparison, Southeast Asia is generally perceived as an emerging market with a lot of growth potential. From your perspective, what are the main differences in how you have to approach business?

I certainly think that the Asian market is different in that it is based on the volume of business to generate margins and profitability. Conversely, in Norway there is a focus on high-quality equipment enabling larger margins off smaller volumes. Additionally, the focus on efficiency in this market means that you cannot afford down time, the cost of which is monumental given current rig rates.

Norway as a country seeks technology; Asian markets generally expect technology to be part and parcel of sales provisions. Norwegians embrace innovative technology and they will pay the market rate for that innovation. By contrast, unless they are working for a large Western company that knows about technology being used in other parts of the world that could be brought to their region, the Asian market generally expect to have that included and not have to pay additional compensation for technological developments.

We now see a lot of new companies coming into the Norwegian market; do they have the same approach to technology as older companies?

Some of the newer companies coming in are still finding their feet here. However, I think these businesses understand that they will experience a considerable change in Norway in comparison to their home markets in terms of regulations having a major impact on the business.

Within a consortium these companies will often bring on board technologies simply for compliance with Norwegian standards. I think that once companies have been around a while they better understand the requirements and what can be delivered, which often implies higher specification equipment. Newcomer companies have to adapt very quickly.

The types of relationships that a supplier needs to generate with an operator are very different in Southeast Asia compared to Norway; what is your perspective on this?

Professional relationships can be a lot harder work for companies like Expro to deal with in the Far East, unless you have local influences close at hand to find opportunities. In Norway, 98 percent of Expro’s workforce is Norwegian. Having local people is a massive advantage in Norway in order to open doors. One does need local influence in both countries, but generating influence in the Far East is slightly different to Norway. Expro has joint ventures in locations like China and Vietnam, where there are people who have access to influential decision-makers, and without that our business would decline. Joint ventures are critical in places like China and Vietnam. The Norwegian market is much more straightforward, and the contracting strategies are very stable and give companies a chance to build a strong relationship with clients.

How is Norway seen from the perspective of Expro’s global strategy given that stability?

A lot of Expro’s vision is based on what the rig market is doing. You can read as much into journals as you like; but for us, if the rig activity is still buoyant and growing, our share of the market will naturally grow as well. On that basis, Expro feels that the growth over the next five years will be steady. Many new rigs coming to Norway have long-term contracts; logically, existing rigs would be more likely to find work because nobody would take on a new rig for a higher day rate on a five-year contract.

Expro is very much in the growth mode; the company is expanding its subsea base in Bergen, and has a well established fluids sampling and analysis facility in Haugesund. The Stavanger operations are seeking land opportunities for a new facility to be built to accommodate the services supported in the area. . Thus we have a five-year plan for growth in facilities, assets and personnel.

How have you been generating efficiency across your current portfolio of projects?

Expro has been pushing forward with modular packages primarily for well testing in Norway. This package reduces the footprint of equipment, and its installation and removal process is much faster. Traditionally it takes two to four weeks to install equipment on a rig to do a job. By having this small modular stackable equipment, it can be sent out and rigged up more quickly.

Expro’s subsea business is different today when compared to a few years back precisely because new technology approaches have been driven from Norway, which have changed the way we design parts of our subsea tooling and equipment. The company is now going through another phase because of new standards that have to be applied to subsea landing string equipment, requiring a design review and change in the specification. Norwegian regulations and the operational environment are influencing the requirements of our equipment which in turn will ultimately be used across global markets. If a company is going to build equipment to a certain standard then it makes sense to continue building to the same standard. That has been influencing our subsea market. Much of the regional work that Expro first undertook in Norway as the original hub many years ago has actually driven our subsea business globally.

What is your perspective on the Barents Sea in terms of environmental risk, and how do you adapt your solutions to this?

We recently installed some equipment on a rig near Stavanger, which has now been moved up to the Barents as part of consortium contract. However, there is no great change in adapting to this new environment, indeed we would not do anything different in southern Norway compared to the Barents Sea because we cannot afford to have any environmental incident in either location. It makes no difference to us whether a rig is just offshore Stavanger or in the Barents Sea; the environmental principles remain the same. The main difference and focus is winterization; we have to ensure that the equipment and personnel are protected from the elements.

You mentioned this five-year development plan; what are your personal ambitions, what would you really like to achieve in the Norwegian market in that time?

We want to be the provider of choice; we have the largest market share, and we would certainly like to retain that position. Ultimately we want to expand the business with year on year growth. Despite what indicators may tell you about the market, you have to believe in your product and deliver that. Expro has to maintain success and show return on investments, on which the company will be measured.

I think Expro is a solid company that has, through years of experience and development, earned its current position. Our experience cannot be replicated in the short term; it would take many years to replace the experience Expro has picked up in the Norwegian sector.

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