| Seahawk Drilling: Leaving the Nest |
| Featured Spotlights | |||
| Written by Meghan Flynn | |||
| Wednesday, 31 March 2010 | |||
 After spinning off from an international drilling company, this organization is taking advantage of industry fragmentation to stretch its wings.
Randy Stilley, CEO of Seahawk, said businesses of all types are seeing the benefits of specialization, and while the oil and natural gas drilling industry was once dominated by conglomerates operating in diverse markets, more companies are splitting up and focusing on specific techniques or geographic locations. Many drilling companies are choosing to focus on deep-water or land drilling, opening up the field for shallow-water offshore drillers like Stilley and his team.  Randy Stilley, CEO Flying solo Seahawk uses jack-up drilling rigs, which are typically capable of drilling in water depths between 15 and 400 feet. This type of rig, according to Stilley, is responsible for as much as 80% of the offshore wells drilled in a given year. He added that projections looking out 15 to 20 years predict that number to hold steady or even grow as demand increases. But the last 12 months have been a challenging time to start a new company, even one with as popular a service as shallow-water offshore drilling. He said the Gulf of Mexico has seen the lowest level of drilling activity in more than 35 years. Although Seahawk had capable teams in place on its rigs, it did have to build a corporate structure from the ground up. “Our main goal was to create a board of directors and a leadership team with experience in this industry, and that’s exactly what we did,” he said. “The professionals working here have experience in many different sectors of the energy industry, in drilling specifically, and in the international drilling arena. We’ve been able to avoid common pitfalls of start-up drilling operations, and we know what to expect as we move forward.” Much of Stilley’s efforts have been focused on improving supply chain management for Seahawk. The company saw early on that it was storing too many extra spare parts on the rigs themselves, which meant it was duplicating its resources in on-shore warehouses. Stilley said the company hired a consultant who had spent most of his career outside the energy industry to take advantage of best practices in other sectors. After establishing a new set of cost metrics and a tighter budget, the company saw a 35% reduction in overall rig operation costs, which Stilley attributed partially to improved management of the supply chain. Opportunity abounds Moving forward, Stilley said the company is building the Seahawk brand and pursuing opportunities abroad. One of the first steps was also one of the most challenging: choosing the company’s new name. “We must have gone through 200 names before settling on Seahawk, which we liked because it refers to an indigenous bird in many shallow seas around the world and invokes a regal, powerful animal. It was a long process, but an important one to establish a direction and culture,” he said. Seahawk’s team already had a reputation for operational excellence and safety when it was part of Pride International. For example, the company has one of the lowest downtime percentages of any competitor; for 2009, Stilley estimated it was around 1%, which is impressive, considering the crews are operating 25-year-old rigs. Stilley said strengthening that reputation is a big part of the company’s brand management strategy. “We never have a managers or board of directors meeting without talking about safety, specifically, but we also hold our crews and our rig managers personally responsible for safety out there,” he said, adding that if the company sees one rig with ongoing safety issues, it will replace the management on that rig. “We don’t tolerate anything less than excellent performance when it comes to safety because this can be a very hazardous business.” Those efforts are working: Stilley estimated that in 2009 Seahawk had a lost-time incident rate of about 0.7%, one of the lowest in the industry. He said the company aims to bring these practices to more rigs in the shallow-water drilling industry through international expansion over the next few years. Because its fleet of 20 jack-up rigs was designed for work in the Gulf of Mexico, Seahawk’s growth will be almost exclusively through acquisitions of drilling rigs currently working in other markets. Stilley mentioned he and his team are looking specifically at the Middle East, West Africa, and the Far East, which he said aren’t as prone to the cycles that plague the Gulf of Mexico market. Because large, diverse drilling firms are moving more toward deep-water drilling, Stilley said there are lots of opportunities to buy more versatile rigs overseas, which is often a much more convenient option for those firms compared to managing both a shallow-water fleet and a deep-water fleet. “One great thing about the downturn in the global economy is the price of rigs is approaching the lowest level since the late 1990s,” said Stilley. “We’re thrilled by the amount of opportunity that exists for this small, promising drilling venture.” |
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