Late last month, qedi, of Aberdeen, was picked up for some £33million by Amec, so securing the firm’s long-term future and providing the latter with a strategic expansion tool.
Behind the initial headline in the Press and Journal is an intriguing story. I believe it shows how vulnerable small, fast-growing energy service firms can be.
At qedi, judging by my post-deal conversation with qedi director Stuart McLeod, there was a compelling need to find a home for the firm. It had been growing very rapidly – perhaps a little too fast for several years – and needed steadying down.
Some 30-35% per annum for the past four or five years is a cracking pace, and there is a distinct danger in this sort of situation that small firms can outgrow their strength. In essence they become victims of their own success.
It’s hard enough in domestic market terms, but even tougher if one nurses global ambitions, which qedi does.
McLeod: “We really needed to get ourselves on to a different footing with a lot more horsepower and support behind the business, including in geographic terms.
“We took a decision last year that we’d need to embark on this process and so put ourselves on the market.
“But I believe Amec had in fact had qedi in its sights for some time. When we actually first met with the different suitors – and they included a number of Amec’s competitors – we realised there was a very good fit with Amec, moreover, both of us had a 2015 vision.
“Also, Amec had developed a very detailed integration plan, which fitted well.”
One thing I like about this deal is that qedi has been acquired by a smart British brand. It’s not simply another UK firm being gobbled up by Johnny Foreigner – or even an EU neighbour. From the Amec perspective, this acquisition is a no-brainer, with John Pearson (MD – natural resources Europe & West Africa) summing it up by telling me: “Everything we design, engineer, project manage and help the build of needs to be completed, and we’ve just acquired the best company in the world to do that.”
This is to be an arm’s-length ownership, one where qedi can work across the marketplace and not just Amec.
The qedi-Amec transaction is the latest to complete in what is already turning out to be a busy year for oil & gas-related mergers and acquisitions activity.
In this issue we break news of two more deals, or rather imminent sales.
One is Altra Energy being offered by its Norwegian owners who, one is told, seem not to understand the need to invest further in a business that they had, in essence, rescued from the ashes of Vienco only a couple of years ago. Xodus is a keen shopper, but it faces competition.
The other is Stork apparently purchasing RBG. It was suggested to me that I would be surprised by the Dutch group stepping in to take asset integrity maintenance contractor RBG to the next level. I’m not.
Stork already has a significant Aberdeen presence and appears to have been a good parent to asset integrity specialist iicorr, since it purchased the firm from CorrOcean of Norway in 2006.
Assuming the deal completes, I’ve no reason to suppose that the Dutch group won’t be anything but a dependable home for RBG, and that the company currently led by Dave Workman will indeed flourish.
At the time of writing this was not a done deal, as private equity provider BC Partners of London is also regarded as a front-runner to take possession from Ashley Group (chairman is John Ray) and 3i, who are said to be keen sellers.
Diving deep
Like many folk involved with the oil & gas community I took myself along to Subsea UK’s annual conference last month and, happily, was a guest at the excellent awards dinner, where Lord Digby Jones spelt out the state of British government like you wouldn’t believe. Call a spade a JCB. He, Jones, was admirable.
As always at such events one learns something new; occasionally the blindingly obvious.
Maybe the need for fully trained deepwater divers, when construction of the UK’s Round Three offshore windfarms gets underway in the middle of the current decade, fits into that category.
These are very large projects and it will no longer be a case of planting turbines in shallow waters using air divers.
Take the proposed Firth of Forth array, for example.
Water depths for this scheme range from 30-80m, so are comfortably into saturation diver territory. Dogger Bank is 18-63.5m; the maximum anticipated depth at Norfolk is more than 70m; while Irish Sea Zone-9 could see turbines planted in nearly 80m.
Literally thousands of turbines are to be installed and not all of it can be accomplished using remotely operated vehicle-based intervention; the human being will be required too, and in some number.
So, has anyone in the UK renewables industry calculated the implications of mixed gas diving: cost, the need for training sufficient people and so forth?
Finlay Finlayson, who a few years ago rescued, and has since spent a small fortune on The Underwater Centre at Fort William, is worried that this aspect of North Sea diver demand just might have slipped through the bars, so to speak. He believes a strategic plan for a foundational career path structure is missing and, while many stakeholders are doing work on competency schemes, there is no overall focus to put a workable plan into place on a North Sea, never mind a world, basis.
The government invested heavily in the late 1970s and 80s to give the North Sea a safety competency scheme that became the benchmark for the world. It was expected that the industry would pick up the competency part of the scheme in the 90s, but this did not happen.
The recent investment in Fort William will not solve the boom and bust problems of training, and further investment in this climate seems unlikely without a properly funded competency strategy, and that is worrying.
What happens when the demand for mixed gas divers for maritime renewables materialises and the older divers of the 70s and 80s finally hang up their flippers and the demand from Brazil, India and Australasia develops? It strikes me that there needs to be some seriously joined-up thinking and implementation of a plan, from the top sat divers to the aspirant young diver who is finding it increasingly difficult to get the funds to invest in his career.
The cost of not addressing these issues could be expensive for the maritime energy industry. It is time to revalue the Fort William resource, as it could be vital in anticipating, and meeting, the inevitable demand for more competent mixed gas divers in the future.