Late last year, a new marine seismic player emerged in Norway. Named Shearwater GeoServices, the geophysical company was created through a 50\50 joint venture between two Norwegian companies, the shipping company GC Rieber and the investment company Rasmussengruppen. As part of the deal, Shearwater took over four seismic vessels from its co-owner, GC Rieber; Polar Empress, Polar Duke, Polar Duchess, and Polar Marquis.
Offshore Energy Today has interviewed Shearwater’s chief executive, Irene Waage Basili, who had joined Shearwater initially on a temporary basis then later as a permanent CEO.
OET: Ms. Basili, after six years at the helm of GC Rieber, you left that position on April 1 to take a permanent CEO role at Shearwater. You’ve been leading Shearwater since its inception late last year but on a temporary basis. What made you reconsider and take the position permanently?
Basili: Having been very involved in the process of establishing Shearwater together with several of the current management team here, of course I already had a strong ownership to the company. When asked by the owners, Rasmussengruppen and GC Rieber Shipping, if I wanted to consider the permanent CEO position I found myself very motivated to take a key role where I would play an active part in making the Shearwater a success.
OET: What makes Shearwater stand out among other similar services providers?
Basili: Contrary to many of our competitors, we have strong and dedicated owners who believe in this segment. Our balance sheet is probably among the strongest in the industry which combined with a very competitive cost base, a competent and adaptable organization, and a high end fleet of vessels should make us an attractive counterpart for our clients.
I think our ability to build backlog with clients at the very start of the company demonstrates that our customers have confidence in us and that they like the “package”- commercially attractive prices, high quality services including broadband acquisition, processing, software sales, and operational reliability – which Shearwater represents.
“The industry has changed drastically over the last few years.”
OET: Shearwater says that building a contract backlog within the seismic market is its main focus. Considering that oil companies are still reluctant to invest in seismic surveys ever since the oil price dropped in mid-2014, how do you plan to achieve that?
Basili: It is clear that the activity level over the last few years has not been sufficient to maintain a sustainable utilization within our space. At the same time, there will always be a certain level of activity. Considering we have high end vessels that are proven in the market, a competent and integrated geophysical services organization and at the same time are able to offer a full spectrum of services from acquisition to data processing at the most competitive price – we believe we will be able to win good backlog. The industry has changed drastically over the last few years. The oil companies demand competitive and flexible solutions and the providers that can offer that in the most cost efficient way will capture market share.
OET: Is there a benefit to the fact that Shearwater is a new player in the seismic market?
Basili: I believe so, yes. It is always more motivating to be the “challenger” then the one who has everything to protect. And when our relative position is also strong, it is even more motivating. This is also the sense we get when recruiting key resources these days. Many very competent people want to be part of a team that is new and agile with a clear strategy to take a position in a difficult market and who is well positioned to do so.
OET: Speaking geographically, what is your primary target market, if you have any?
Basili: The market is global and Shearwater will consider all possibilities globally provided they fit with our vessel and resource positioning.
OET: The year started off with new contracts for Shearwater with two Norwegian Sea surveys planned for TGS. The surveys were set to start between March and May with two vessels to be used. We’ve asked Shearwater CEO which vessels will be used for these surveys.
Basili: Polar Empress and Polar Duchess will be used for these surveys. Polar Empress started her mobilization last week and the Polar Duchess is currently steaming up from India where she has been operating on a contract for ONGC since December.
‘Difficult winter’ ahead
OET: When asked how long these surveys will take and what’s in the pipeline after they’re done, Basili told us the surveys will last for 4 and 6 months respectively, effectively generating backlog through Q3. Regarding what’s ahead, Basili said Shearwater is currently pursuing a number of leads for Q4 and beyond, however there are no firm awards yet.
Basili: Q4 and Q1 are typically the most challenging and we expect a difficult winter this year as well.
OET: What about the other two vessels? As far as we know, the Polar Marquis was recently hired for a survey and it is now located offshore India. Is the survey in progress and how long will it take?
Basili: Yes, correct. Polar Marquis was just awarded an extension under the ONGC contract which she has been operating under since December together with Polar Duchess. We have been quite fortunate in having continuous backlog for these two vessels since the commencement of the company in December. We are working on a number of firm leads following the completion in India but not anything we can name yet pending an award. We will of course prioritize good utilization on the three vessels we have in operation before we decide on taking out the Polar Duke.
OET: According to available information, the fourth vessel, the Polar Duke, has been cold stacked since the last quarter of 2016 while still under GC Rieber’s ownership. When asked if the company will be bringing the vessel back, Basili said that, while the objective is to bring it back into operation, the timing remains to be seen as it is guided by visibility on backlog.
We’ve also asked Basili to guide us through the re-activation process in terms of costs and time necessary to “bring it back to life.”
Basili: I’d prefer not to comment on costs, but timing wise we estimate it will take about 1,5-2 months to get her ready for operation once all the equipment is in place. Obviously, we are already assessing preliminary preparations and what can be done to shorten the re-activation period if need be.
“The market may tighten as we move into next year.”
OET: Your co-owner GC Rieber saw quite a drop in its seismic vessel utilization as it went from 75% in 4Q 2015 to 21% in the same period of 2016. Has there been any change in demand for seismic vessels since the beginning of this year?
Basili: Shearwater was established on 22. December 2016 and we have had good and continuous backlog for two of our three operative vessels since then, which we are very satisfied with. We see an increase in tender activity, hence demand for seismic vessels, since the beginning of the year, which we deem to be a combination of seasonal activity as well as a general view that the market may tighten as we move into next year and that certain companies take the opportunity in today’s market to secure capacity.
“Seismic is shipping on steroids.”
OET: You’ve been working in the seismic sector for almost a decade now. It’s been said that the seismic sector is the most volatile and cyclical in the oilfield services market. So, when things get shaky it’s the first to feel the impact and the last to recover. Based on your experience in the industry and seeing that oil prices have somewhat stabilized lately, do you see the seismic sector recovering any time soon?
Basili: I came into this segment from the more conventional shipping industry and my observation then was that “seismic is shipping on steroids.” The volatility is a fact and something one needs to plan for, primarily through a strong balance sheet and careful cash and cost management so that one can make it through the cycle.
I believe the timing for Shearwater is very good. We are rigged so that we can manage a continuously difficult market for quite a while – and yet rigged so that we can take advantage of a market recovery when it comes. A more stable oil price means improved predictability for the oil companies who clearly have a gap to close when it comes to exploration given the drastic cuts for more than three consecutive years.
The magnitude of cuts over so many years has not really been seen before and as such it is uncharted waters when it comes to predicting the coming effects. I believe in a careful recovery in 2018. In Shearwater we can live quite well with a sensible recovery.
Interview conducted by Offshore Energy Today’s Nermina Kulovic