Offshore sector M&A activity continues apace, with Aberdeen-based ‘inspect, assess and repair' services provider RBG among the latest players to change hands. Meg Chesshyre talks to RBG chief executive Dave Workman about the background to – and implications of – his company's May takeover by Stork Technical Services and Arle Capital Partners.
The acquisition of RBG, which employs around 4500 and in 2010 had revenues of about £300 million, is seen as a strategic addition to Stork Technical Services (STS), a leading knowledge-based asset integrity management company with 10,000 personnel and 2010 revenues of about €1000 million. STS is part of the Dutch-headquartered Stork Group. Arle is the parent company of Candover Partners, manager of the Candover Funds.
Formed in 2004 through the merger of Rigblast Group, Macgregor Energy Services and Mach-Ten, RBG was one of the UK's largest privately owned oil service groups. While its primary market is the UK, the company has a significant and growing international presence in the Americas, Caspian and MENA regions.
CEO Dave Workman explains that back in 2010 RBG re-energised its strategy around wanting to become the leading industrial services and construction provider. To do this the company needed to gain access to additional resources. Towards the end of last year RBG approached the market with a view to raising some additional equity, and went through a variety of options which culminated in the trade sale to STS in May.
Workman notes that STS and RBG are very compatible in terms of services. ‘We share a view that the market for industrial services is immature and there is not a single global player in that market, but there is space for one to develop. STS has access to capital which will enable RBG to grow as we had anticipated when we redesigned our strategy.'
The other issue is that there is very little footprint overlap between RBG and STS and so, unlike many oilfield services deals, there are no plans to downsize or rationalise. ‘We are actually immediately moving into growth, increasing our sales effort, growing ourselves, and expanding the offering in all the places where we currently have representation,' explains Workman.
The acquisition has increased the two companies' global reach, ‘but it is not just about going out into those areas and putting up our "we are here" sign', he says. ‘It's more about dealing with existing customers in areas where hitherto we haven't been present, so that, of course, is quite attractive to the majors for whom asset integrity and compliance are now critically important.'
‘We in RBG have a very large workforce involved in the acquisition of asset integrity data and by that I mean inspection data,' Workman points out. ‘We do that in conjunction with a number of service providers who offer the integrity management services, so we acquire the data and third parties will interpret the data and present it to our clients.
‘With the addition of the RBG capability to STS or vice versa, we now have the capability to offer a complete integrity solution to our clients. Working with STS' Inspection & Testing Product Line [previously iicorr], based in Aberdeen, we can both acquire the data and manage the interpretation of that data, working with our clients to ensure that the asset integrity objectives are married to the budgetary constraints in order to deliver safety compliance.'
He adds that discussion of asset integrity is very timely in the UK. It is a subject that has been much debated since last year's KP4 governmental guidance on the requirements to demonstrate asset integrity, giving ongoing proof of asset integrity rather than an assumption based on a 30-year old design premise.
Post acquisition, RBG is now looking at providing its services outside its core areas of the Gulf of Mexico, Trinidad, the Caspian and the North Sea. ‘We are now looking at continental Europe and at teaming up in Holland. We're working closely with STS and their South American operation, which is very sizeable in Colombia. We are looking at how we can move RBG services into those areas.' Asked if there is more to come in terms of acquisition, Workman says that the technical capability that STS and RBG now have in the portfolio is more than enough to justify a claim to be a global leader in industrial services and construction support. However, there may be some opportunities to improve global coverage through acquisition in areas where both companies have no bridgehead.
One of the attractions of RBG for STS is that the company is a market leader in decommissioning, and is very strong on the UKCS. RBG has been involved in all three significant decommissioning projects that have taken place on the UKCS so far – ConocoPhillips Maureen, Total MCP01 and BP North West Hutton.
Workman sees decommissioning in the UK as a huge up and coming market, with current Oil & Gas UK estimates indicating it could be worth £25 billion over 30 years. ‘The combined STS and RBG addressable element of that market we believe to be about 25-30%. Areas such as inspection, cold cutting, cleaning, light construction and deconstruction are bread and butter activities for the combined group.'
Workman is keen to highlight his company's emphasis on safety, following the launch of its REACH safety programme in December 2009. ‘We've transformed what we are doing in the company in the area of safety and safety performance to the point where it is seen by our clients as a differentiator across the globe. We are delivering less than one LTI (lost time incident) per million manhours.' He sees this as an exceptional performance, particularly given that for the most part the company's employees are engaged in tasks that involve working from heights, hanging from ropes, cutting, chopping things up or cleaning with high pressure hoses.
He anticipates that the RBG brand, being a strong brand, will be retained for the time being. ‘We are continuing to support our clients and we are integrating with STS in terms of sales opportunities, technical integration and taking that technical offering to our clients to see if we can create bigger opportunities for the group.' OE
Workman's way
Dave Workman joined RBG in November 2009 as CEO, and remains in post following the acquisition. A graduate of Strathclyde University and Imperial College London, he started out in 1983 at BP where he trained as a petroleum engineer. He then went on to Hamilton Oil followed by a stint at Kerr-McGee.
Next, together with a colleague, he founded a small floating production company which, following acquisition by Atlantic Power in 1996, became the first UKCS contractor duty holder on the Galley field. In 1999, Atlantic Power was acquired by Petroleum Geoservices (PGS Production) and Workman became managing director.
Workman founded Tuscan Energy (TES) in 2001. TES raised funding and redeveloped the Argyll field (renamed Ardmore, OE February 2002) with first oil in 2003. Following the early abandonment of Ardmore in 2005, along with the duties involved in the administration of TES he worked as an oilfield consultant prior to joining RBG.
Stork Technical Services CEO Doug Meikle (left) with RBG's Dave Workman after inking the deal. Meikle said the RBG acquisition was ‘consistent with our strategy to enhance our service offering whilst expanding our global footprint'. Workman described the deal as ‘good news for our global community'.