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itself on ? rm footing, with the majority of its assets on the An Offshore Business Model: water and earning money. There is, says Harvey Gulf Interna- for good times, and bad tional Marine President and CEO Shane Guidry, a formula for In the summer of 2013, Maritime Logistics Professional that reality – in good times and bad. Very few offshore service visited Shane Guidry for an exclusive interview. With the av- providers would talk on the record during this dif? cult time. erage price of crude oil hovering around $105 per barrel – and

Harvey Gulf is one that did. about to go even higher – Guidry said, “There are other groups with more folks and boats, but we don’t play in the DP1 arena.

Bad News and … More Bad News It’s not high quality enough for us. I run my company differ-

There is plenty of bad news to go around. According to Dr. ently. Our goal is to get 5-year charters for our boats. Today,

Scott, the situation isn’t likely to turn around soon. The stag- 80 percent of our ? eet have those; the rest have one to three gering low GoM rig count was recently further accentuated years. We prefer ? ve years and we’ll give a discount to get as ConocoPhillips announced that it was departing deepwater it. I have a certain EBIDTA return that I want to make on at the same time that two others paid hefty cancellation fees each asset – somewhere between 57-67 percent, depending on to escape drillship contracts. Western Gulf lease sales have the cost of the vessel, its size and ability to bring the higher plummeted from 2014 numbers (14 ? rms; 93 bids) all the way amounts of cargo to get the higher rates. I’m comfortable not down to today’s 3 ? rms who made just 24 bids. pushing the envelope; I’d rather have long term contracts that

Bakken on shore well costs are falling while the GoM con- allow me to pay down debt and build assets.” tinues to get more expensive. And, 14 new production plat- In a nutshell, Guidry committed to a long term policy that he forms require just 25% of the number of service boats that claimed would sustain his ? rm in the best of times, and just as drillships and drilling platforms would need. As the offshore importantly, leave it on solid footing when the times got bad. energy industry negotiates with BSEE to lessen the cost of the More than three years later, we asked him how that had panned new well control rules, GoM CapEx – and the rig count – is out. As it turns out, privately-held Harvey Gulf has seen its set to drop even further. There is good news to be found, if one share of the pain now plaguing the entire sector. With its head- looks hard enough at the raw numbers. count now down to 700 from a high of 1,200, Harvey Gulf’s

The 2014 ‘breakeven’ costs for offshore drilling, through ? eet of 59 vessels still has 34 working on the water. True to the better technology and belt tightening, has dropped to about Harvey Gulf formula, 26 of those 34 vessels are operating on $55-60 per barrel. Dr. Scott, in an address to the American time charters. And, according to Guidry, that’s way it will stay.

Association of Port Authorities in October, projected a 2017 “We’re long-term thinkers and fortunately we don’t live for average price per barrel of crude oil of approximately $53, today and we don’t live to sell stock. Last quarter, our EBIT- possibly rising to $60 in 2018, with recovery ? nally coming DA was more than Seacor, Tidewater, GulfMark, and Horn- in 2019. Scott told his audience, “Things are tough, but they beck put together. Our returns were over 60%. That’s purely could be tougher.” from being in the business all my life, understanding my cli-

Shane Guidry, for the most part, agrees. “Next year will be ents’ needs, getting down in the weeds with my crew members the most challenging year. 2018 will likely be worse and I and my staff, and working with them to understand what’s think in 2019, we’ll see the light again. It’s about the price coming next, how we all survive together, in your personal of oil forcing everyone to scrap projects and push them to lives and in the business,” insists Guidry.

the right. Less capital is being put out to work in this space,” Guidry also projects his ? rm’s EBITDA will be over $160 mil- he told Maritime Logistics Professional in an exclusive in- lion this year. Facing a much different landscape than he could terview, adding, “You’ve got debt holders out there; you’ve have possibly predicted in 2013, he also maintains that, aside got investment bankers out there looking to come in and steal from the necessary belt tightening, little has changed in terms people’s companies. So, let’s face it: 2017 is going to be a of how he operates. Pressed to explain why, Guidry responded, mess.” At the same time, Guidry says that those companies “You have to decide: do you want to live for today or tomorrow? with a healthy backlog and that “are well run” will survive. At I’ve got a 10, 15, 20-year plan for this business. I’m not thinking this point, though, there aren’t too many that can boast both 30, 60, or 90 days out. That model requires a lot more thought, metrics. Harvey Gulf might just one of them. more work, and a lot more relationship building. It requires you

Guidry also isn’t shy about saying what will happen next. to be a better operator; it requires you to be a safe company. “I think the debt holders are going to look at which compa- Because major oil companies tend to invest in long-term con- nies have the best management teams to stay invested in and tracts with you – they have to really believe and see that your make sure those companies have enough capital to survive. I safety culture is true to what you’re selling, so that when they think you’ll see ‘revolvers’ for some companies cut and I think lock themselves into this long-term contract, they know they’re you’ll see more bankruptcies. Consolidation is the key. People not going wake up three years from now dealing with a disaster.” need to start focusing on that. Egos need to be put aside.” For Guidry, the way forward still involves a strict culture of www.maritimelogisticsprofessional.com 45I 34-49 Q4 MP2016.indd 45 11/9/2016 12:26:18 PM