Oceaneering International, Inc. (ticker symbol OII) is a Houston, Texas based oilfield provider. So it probably doesn’t surprise you that an oilfield provider might be located in Texas, right? But the name is the first clue to this company’s uniqueness. Oceaneering (“Ocean Engineering”) is exactly what they do. They provide engineered services and products to the offshore oil and gas industry with a focus on deepwater applications around the world. OII has regional headquarters in Brazil, Norway, Scotland, Singapore and the United Arab Emirates.
Founded in 1964, Oceaneering International has two main business areas: services and products provided to the oil and gas industry, and Advanced Technologies, which includes support to the defense and aerospace industries.
The services and products area provides remotely operated vehicles (ROV’s), which are operated by technicians usually onboard a ship or a floating drilling rig. ROV’s are used to perform a variety of offshore oilfield tasks in water depths which manned divers can’t reach. (Click on this link to see an ROV in action) Oceaneering is the world’s largest manufacturer of ROV systems and is the largest operator and provider of work class ROV’s. OII has a fleet of over 250 ROV’s and employs more than 2,000 worldwide ROV offshore personnel. This segment accounted for approximately 34% of 2010 revenue.
Subsea Products (29% of revenue) includes manufactured specialty subsea oilfield products which are built to order. Giant control umbilicals, ROV tools, clamps and valves comprise some of the products offered. (Click here to see examples of umbilicals)
Subsea Projects (13% of revenue) provides subsea oilfield hardware installation, infrastructure inspections, repairs and maintenance services. OII services not only deepwater projects with ships which have ROVs onboard, but also shallow-water projects with manned diving support vessels.
The inspection segment (12% of revenue) provides non-destructive testing and inspection, integrity management and assessment services.
Advanced Technologies (12% of revenue) provides engineering services and manufacturing to the US Department of Defense, NASA and the commercial theme park industry. They also provide service on US Navy surface ships and submarines.
So what attracted IAM to Oceaneering International? We look for innovative, well-run companies which fit our SELECT List criteria. We think Oceaneering International could be one of the next generation Blue Chip stocks, whose size provides them an opportunity for expansion and growth. (Click here for Rich Erwin’s IAM Insight article “Finding Growth in Smaller Socially Responsible Companies.”) OII’s mission is “to increase the net wealth of its shareholders by providing safe, cost-effective and quality-based technical solutions satisfying customer needs worldwide.” In early December 2011, OII had no debt and over $150 million in cash. Their third quarter results were at an all-time high from ROV and Subsea Products operations. And in 2010, the company had a two-for-one stock split and began paying dividends. OII’s dividend yield is 1.30% at the time of this article.
Oceaneering’s number one ethic is the safety, health and well-being of its employees, contractors, customers and the public. “No job is so urgent that it cannot be done in a safe and environmentally responsible manner. Oceaneering will foster an atmosphere that focuses on prevention of incidents and protection of the environment. Safety will never be compromised.” (From Oceaneering’s Health Safety and Environmental Management System policy statement.) As a recent example, OII installed well completion hardware in the Alaminos Canyon area in the Gulf of Mexico. Through all phases of planning, engineering, and execution they had a perfect safety record. OII has developed the best ROV workforce in the industry by continually investing in its employees. The ROV operations and maintenance training program began in 1995 and has a budget over $10 million per year.
OII has an environmental management plan whose intent is to “ensure the environmental impacts of operations have been properly identified, assessed and appropriate processes are implemented to reduce environmental incidents and liabilities.”
And if you were wondering what OII was going to do with all that cash on its books, here’s an answer. On December 20th 2011, OII’s Norwegian subsidiary, Oceaneering AS, acquired AGR Field Operations in Norway. It’s a complimentary fit to the services Oceaneering International provides. On December 21st 2011, Oceaneering secured a three-year field support vessel services contract with BP, where OII will provide project management, engineering and vessel services offshore to Angola beginning in February, 2012.
With drilling intensity rising, especially now that the moratorium on deepwater drilling in the Gulf of Mexico has been lifted, a specialized engineering and product service oilfield provider like OII is in prime position. We’re looking forward to seeing more progress at Oceaneering International.
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