with Keesjan Cordia, Managing Director, Workfox
Founded in 1991, Workfox, part of Seafox Group, has gone though many transformations and an impressive growth since 2005 – the year you joined the company as its Managing Director. Hence, could you briefly introduce Workfox to our readers highlighting its main activities and milestones since you joined the operations?
When I joined in 2005, the owning entity was a 50/50 joint venture which was not focussed on growing out to the company. The strategy was mainly to cash out the revenues generated from years of operations. As we have a family interest in Seafox, I joined in 2005 after gaining years of experience with oil companies in The Netherlands, Denmark and the UK. We saw an interesting opportunity in this niche market, especially at the time, so we decided to buy over the other 50% of the shares, invest into the company and grow it out.
From a spot related business model, we wanted to enter into longer term contracts with oil companies, and plan how our support vessels could do effective and efficient integrity and well service work. For the oil companies, at a time where the prices of oil and gas were at a high, this approach made a lot of economic sense and gave security to equipment for the oil companies.
On our side, we wanted to build and grow our business with sustainable growth levels. Therefore, we engaged into discussions with major oil companies, and thanks to our track record, we signed various contracts in 2005/2006/2007 and we have a contracts running until 2015 with options until 2017 with, Total and Shell. Having two units, both the Seafox 2 and Seafox 4 on a longer term charter with major oil companies was the basis to grow the business and a way to potentially finance different acquisitions such as the Seafox 1 that we bought from Chevron in 2007.
Being awarded a contract in 2008 from Shell for their first big Southern North Sea decommissioning project is another important milestone. Irrespective of oil and gas prices, the market inexorably moves forward, and at some point will need to be decommissioned. Therefore, we were keen on being a first mover on these projects. Companies tend to follow templates that have been used in the past, so the likelihood that your type of equipment or company is hired in the future increases when the company has built a good track record. Especially in this Project as all parties namely Halliburton, AF Decom and Workfox have respectable track records in the field of activity they support in this project.
Indeed, the core of our business success is our very good track record, with safety and operational excellence.
Workfox has also invested in major upgrades on our existing fleet – Seafox 2 in 2006, Seafox 1 in 2008. We acquired Seafox 7 in 2008 and first found some spot contracts to build track record for the rig before fixing it up on the long term. Therefore, Seafox 7 had a year of spot operations with Shell, GDF, RWE. We were awarded a 4 year contract by Conoco Philips, thus we upgraded the unit so it could fit their demands and requirements to execute life time extension on their platforms.
The key to success is to invest in a piece of equipment that can become part of a daily operating methodology within the oil company’s operations. Workfox have invested to increase the window of activity that can be undertaken by our units and therefore, it becomes very cost efficient to use our equipment. The concept proved itself with major oil companies: we started as accommodation rigs, now we are also doing wells services work for example, increasing the efficiency of the rig while the pricing stayed reasonable.
You expanded your array of services entering new areas, providing new services you were not familiar with. What challenges did you face to first get the clients and maintain operational excellence?
It is difficult to identify the specific challenges that came along with these developments. To start with our core marine crew are competent offshore personnel that have been working in the drilling or well service related industry for the last 20 years. Therefore, we accessed that a turnaround in scope needed to reflect upon the capability and expertise of our crew so that it was safe to do so. Risk analysis and HAZID meeting determined that together with the subcontractors we could “guarantee” safe operations. The main challenge was to broaden the way the oil companies look at what they could do with a Seafox. Dealing with a large bureaucratic organisation and getting them to believe and issue new projects to generate the multi-purpose effect of the rig can be challenging. At first, they believed the upgrade only reflected to accommodation support, but little by little all people involved started to realise the flexibility of the unit and that was encouraging to see.
You are facing competition not only from Dutch service providers but also from international players that are well established in the Netherlands, and already working with the oil companies in other markets. How did you carve your niche and differentiate from the competition?
When Workfox started, most of Dutch innovative companies were in offshore construction, offshore transportation, drilling and heavy lift. We were in a very niche market, with a high entry barrier since the cost of a rig is approximately EUR 60 to EUR 80 million. Thus, traditionally we never faced a lot of competition with this entry to barrier.
In the last couple of years, the demand for these support vessels grew so fast that competition became a necessity, but we strived to keep the leading position within the Southern North Sea and have been successful in doing so. thanks to our track record. Workfox faced competition mainly from new comers backed by financial investors who saw opportunities in this market segment. But the market is all about operating efficiently and safely as the risk involved can be devastating , Today, our biggest challenge is training new recruits and making them part of our Management System and the Workfox way of working. Workfox has recruited 150 to 200 people in the last two years. This takes time and focus from both offshore and onshore management to ensure that this is done in a practical but managed and safe manner. With our core marine crew being with our company for many years the integration process was well managed although these type of challenges have their falters and required corrections.
Many in the E&P industry are pessimistic about the prospects for the North Sea and are migrating to more profitable areas elsewhere. As a service provider, do you see further growth potential in the North Sea?
There are two sides to the offshore business in the North Sea. First, there is exploration and production. If you speak to someone exploration related, he or she will tell you the fields are depleted, that it’s too costly to get the gas or oil out, and from an exploration view point, it’s perfectly right: Caspian, Brazil or West Africa are much more attractive markets.
However, there are also issues in the start up phase that are challenging and costly. In a mature basin, there is a certainty as to what you will produce and get transported to refineries, you are economically and politically safe and have little difficulty getting it into the midstream and downstream end and above all you know the costs involved. We tend to forget that the North Sea fields are today’s cash flow for the oil companies, while future projects are only a projected cash flow based on assumed costs.
Furthermore, there are many opportunities in terms of infrastructure and integrity issues that we can seize. The platforms were built in the 70’s and 80s and they need to be maintained to be safe for the people working on them. In the North Sea someone getting injured is not acceptable and the government related and client focussed t safety rules provide additional scope to support a Seafox unit.
Do you believe the current legal framework gives the right incentives for further E&P and allow companies to make the most out of the remaining opportunities in the Netherlands?
I think more could be done. The tax incentives are not interesting enough for oil companies. But if they want to sell assets because the incentives to stay are not high enough, they still have the decommissioning issues.
We have entered a vicious circle. Two years ago, everybody wanted to buy assets from the majors that were leaving, but today the independents are lacking financing because of the crisis – and the financial challenge is the crutch of the problem. If you don’t incentivize production and give a stimulus for decommissioning, oil companies will push out decommissioning for as late as possible. This is something they have agreed to do 30 years ago, but it’s purely cost, so tomorrow is always better than today.
Oil and Gas Financial Journal is coming to the Netherlands after being in Aberdeen, UK and Stavanger, Norway where we met with local flagship players like Workfox. How would you differentiate the local industry from your competition in the North Sea?
Stavanger and Aberdeen are hubs that have attracted many major players, but I would say the Netherlands offer one of the greatest accumulations of offshore expertise and innovation in the world. Aberdeen and Stavanger don’t have the identity and the footprint of innovative entrepreneurship that the Netherlands has.
Today, this expertise is one of the Netherlands’ greatest assets. You were telling us earlier that you hired 200 people to fuel your growth. How did you manage to attract the best talents and retain them inside Workfox?
I’m quite young, and in general the company is quite young as well. We like to hand many responsibilities to our employees quite early. And by doing so, attracting talents is not that difficult.
Workfox attracts practically driven talented people who seek responsibility and after assessing their capabilities, we will give them the opportunity to execute these roles and responsibilities .Our people are immediately faced by the practicality of the works and the different aspects of managing projects as opposed to back-office works that don’t include the more “soft- issues” of project management. . We have been quit successful, especially on the onshore side, to maintain the people who have been through the learning curve. If you manage the learning curve, stay in control, respect the cycle and provide good surroundings, people will stay. Workfox has given initiatives, projects, and respect to this learning curve and this is the reason why this company has been the employer of choice for an increasing number of very talented people.
What are your main ambitions for Workfox for the coming three to five years?
On the short term, our aim is to manage the growth we have gone through while maintaining operational excellence. We will focus on the work and on keeping the clients satisfied. Workfox also needs to continue the reflection on which market we need to tap in the future. On the more long term, a new shareholder entered our board in January 2009. We are letting them get into the rhythm, and then we’ll gear up once our operations are fully in place.
At 35, you are a relatively young manager in an industry known to be conservative, which undoubtedly raised some challenges. Hence, what would be your final message to young professionals who are set to face these same challenges that you did?
As long as you are confident about your technology and your methodology, and you are capable of communicating what you’re doing in a “practical manner” and why you’re doing it, you will conquer your space in this industry. Besides the above, if you have the enthusiasm and dedication and transpire this to your people, everything is possible.