Company Reports - SAR Energy S.A.
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SAR Energy S.A.
SAR Energy S.A., the Hydrocarbons boom in Colombia
SAR Energy S.A. is a private Colombian company of engineering, procurement and construction management in the petroleum and gas industry. The company started operations in 2007 in response to the great demand of integral services in the hydrocarbons sector in Colombia.
Since its foundation SAR Energy S.A. has been registering a fast growth; more than 100 percent of its income every year. (2007: $270,000; 2008: $7 million; 2009: $20 million; y 2010: $48 million)
"We started in an environment of high demand because of the conditions Colombia was going through in terms of investment in exploration and exploitation," Financial VP of SAR Energy S.A. Felipe Sardi said.
SAR Energy S.A. is one of the few local companies of petroleum services that has been able to share the market with the world's major multinational companies. “Our services are directed primarily to the multinationals that have come to invest in Colombia," Sardi said.
The customers of SAR Energy S.A. are recognized multinationals dedicated to Exploration and Production (E&P) with branches in Colombia. Some of them are: Emerald Energy, Petrominerales Colombia, C&C Energy, Ramshorn Energy and Parex Resources among others. These companies have a big presence in Colombia and look for the services that SAR Energy S.A. offers for the production and the implementation of their facilities.
Business line and operation
SAR Energy S.A. focuses its operations on design, engineering, installation, development of production projects and improvement of industrial processes.
45 percent of the company's income comes from Early Production Facility (EPF) "We offer offer engineering services, procurement and construction of facilities, then we offer operation and maintenance and even rent out equipment," says Sardi.
To better understand the process, Sardi says: " when a company explores and finds crude, the government sets a limited amount of time to declare if the well is commercially viable or not; at that point SAR Energy S.A. comes with its team to design from basic engineering to final details of the early production facility and install storage tanks, pipes, generators, water injection pumps, etc, on a period of 30 to 60 days. During that time, the company has a production facility for testing early wells at an average of eight months to a year until they decide the viability of the well. If the results are positive, we build permanent larger facilities, more expensive and with a bigger investment."
One of the largest lines of business growth in the last years is the Gas Treatment line. Here SAR does the design, refurbishment, supply and installation of gas treatment plants. "We do the engineering for the companies that are not currently working with associated gas. We bring the equipment to dehydrate the gas and then we generate energy from the resulting dry gas," says Sardi. This business line is represents 30 percent of the turnover.
Similarly, the Water Treatment line is very important because in Colombia, especially in the Llanos Orientales region, the oil is associated with a large water production. The operating companies are asked to treat those waters extracting hydrocarbon, to make a clean filtration treatment and finally re-inject them into the same formation or other formations. For this reason, companies like SAR Energy S.A. are in demand because they install the equipment and design the facility for a better water treatment.
Additionally SAR Energy S.A. offers other low-income lines such as Power Generation dry gas fields, among others.
The company provides comprehensive services with direct access to the latest technological trends in the industry adapted to the specific needs of each client.
The specialized team from SAR Energy S.A. builds much of the equipment and designs custom machinery to the specifications of the client with its own engineering. "The technology we use is well known worldwide but we are different from our competitors because we exclusively elaborate certain details to suit each client. Many times we buy equipment abroad, then import and re-manufacture it to your specifications. We have focused primarily on understanding the needs of our customers. We are pioneers of the industry in Colombia," says Sardi.
Short term the company plans to make a significant investment of $50 to $100 million for the acquisition of new equipment, machinery and the construction of facilities for the Gas Treatment and Water Treatment.
According to Sardi, the company is in a capitalization process in order to get a strategic partner in a process that could take until April 2012. "The idea is to open the company for a partner to come, capitalize and together invest in the next three to five years in a very aggressive expansion plan," he says.
Although Sardi couldn’t reveal specific numbers, he said they could exceed one hundred million dollars. "We are here to stay, we want to grow and look forward to keep being successful."
Currently the company holds a market participation of 1.5 percent in Colombia Over the next five years, SAR Energy S.A. is looking forward to reach more than seven percent of the market, become a leader on Gas Treatment, achieve revenues of $ 250 million and develop projects for more than $50 million.
Additionally the company plans to open its portfolio to offer upstream and workover services.
Among other future plans, SAR Energy S.A. doesn't rule out the possibility of conquering the international stock market.