Reservoir Group is an emerging global market leader in downhole tools, technologies and associated sub-surface services. Exec Digital talks to CEO Pascal Bartette about the company
By Jessica Summers
Headquartered in Aberdeen (Scotland), Reservoir Group is an international group of companies providing the global oil and gas industry with exclusive drilling, completion and production technologies and related services.
The group, backed by Aberdeen and Houston private equity firm SCF Partners, burst onto the oil and gas scene with the £20 million MBOof Corpro in 2007.
Ranked number one in the UK in the 2008 Sunday Times Buyout Track 100, Corpro has provided the bedrock for the foundations on which Reservoir Group is building a global business focused on “down-hole” drilling products and services.
Corpro and US company Dowdco, form the basis of the group’s activities in drilling downhole tools and services. Both these companies specialise in coring services and related activities. The addition of Omega Data Services marks the Group’s first step into completion and production tools and services. Omega specialises in the design, manufacture and supply of downhole memory tools and gauges for pressure and temperature surveys.
Together these two distinct areas allow Reservoir Group to provide a broader spectrum of services to the oil and gas industry. Equally, they spread the risk for the group in that while drilling is very cyclical, production and completion activity is far less affected by oil price.
Storecore was acquired in April 2008. The company specialises in the storage and handling of core samples and this acquisition adds another dimension to existing Reservoir Group companies, in particular Kirk Petrophysics which has developed specific technologies to protect the condition of the cores whilst being stored, handled and transported.
“The point is to increase the range of competences the group has to offer around our existing worldwide network” explains Bartette.
Acquisitions
Reservoir Group completed five acquisitions last year in 2008 and plans to continue growing through acquisition and organic growth according to Bartette. The Reservoir Group identify and acquire niche, independent, technically market-leading companies and offer them the opportunity to grow through the synergies existing within the group.
“The way we approach acquisitions differs to others in the industry, in the sense that we look for businesses with specific criteria” says Bartette
“We look for businesses who will benefit from joining the Reservoir Group, so ideally it’s a business that has a good brand with great management, and a good technology but which is not yet present internationally. By bringing the business on board they can right away benefit from thestructure of the group and spread their services or their product internationally.”
Reservoir Group is not a trading company so each company within the group remains an autono¬mous entity; it keeps its management differentiating it from others within the industry. Bartette has found this approach is very beneficial, as it gives an incentive for strong commitment from acquired business management and from the staff.
“We did these five acquisitions last year and nobody left, there is still the same management and the same senior offices in the company and they are enjoying the growth and benefits,” he says.
Current situation
The Reservoir Group operate all over the world and have in turn been affected by the global economic situation. “Our company in the US is obviously suffering; activity has capped 50 percent compared to what it was a year ago. So we had to cut some costs” explains Bartette “The company remains profitable and is able to go on, proportionally reducing its revenue in decline with the activity.”
Internationally, overall performance has not been as good as last year, which was an excellent year for Reservoir Group; in fact 2008 was the best year ever performance- wise for the group.
“On a first look it seems bad, but the reality is that some of the divisions are ahead of plan or they’re very close to schedule, we are still remaining largely profitable so it is just a matter to be patient,” says Bartette, who also assures that international business is quite good, despite some delayed projects.
“It doesn’t help the cash flow but it’s better than cancelled projects,” he says.
So what’s the answer? Bartette believes it is focus to the client and technology, and that is exactly what Reservoir Group tries to deliver. “It’s a case of survival of the fittest, okay you are losing revenue but winning market share - when it all bounce back, you get back stronger and ahead of the crowd,” he explains.
Supportive clients and market share are going to ensure that Reservoir Group can confidently look back from the other side.
The future
With constant investment in the latest technologies, Reservoir Group has launched several new, successful products into the market, notably the Liquid Trapper and various other developments with a shared goal to add value to the client, making their life easier and more efficient.
The Liquid Trapper is providing a new source of revenue to the group and will represent this year possibly up to five percent of the total turnover. Omega is also introducing new product for ultra hot wells going beyond where any other has gone before.
So what makes Reservoir Group so successful and unique? Bartette puts it down to the structure of autonomous companies with a shared group mentality to be proud of. Each company in itself is a specialist, and as a whole they service the oilfield services industry to an extensive degree.
“When you look at the results, it proves it’s much better and effective to structure in the way that we do it rather than purely consolidate in a single unit,” says Bartette.
“Human beings lose their focus when they are part of something huge- this way every individual knows where they stand within a larger shared goal.” he concludes.