1887
Volume 22, Issue 6
  • ISSN: 0263-5046
  • E-ISSN: 1365-2397

Abstract

With the market still fragile, there’s no tougher assignment than leading the largest geophysical services company in the world. Dalton Boutte, as president of WesternGeco, is putting his faith in technology to keep the company ahead of the competition. Andrew McBarnet, publishing editor of First Break, profiles the man and his mission. Dalton Boutte doesn’t refer to himself as a company doctor, but that’s effectively the role he has been playing over the last 16 months or so as president of WesternGeco, the world’s largest seismic company jointly owned by Schlumberger and Baker Hughes. He admits that the job has been by far the most challenging of his 24- year career with Schlumberger, the 70% stakeholder with management of WesternGeco on behalf of the joint venture. Talking to Boutte you have the impression that a significant corner has been turned in the fortunes of WesternGeco. It has a lot to do with improving financials and the long awaited signals that the oil industry is gradually accepting Q, the technology which WesternGeco sees as its big differentiator in the competition for future business in the seismic services industry. In common with its immediate competitors in the geophysical services market, the company was wrestling with the problems created by the dramatic market downturn in 1999, caused by a combination of factors, notably consolidation of the oil company customer base, chronic over-capacity, and a business model for the provision of geophysical services in need of a major overhaul. Boutte took over the WesternGeco job at a particularly difficult time. The company was in the midst of restructuring, was closing its land seismic operations in the US lower 48 states and Canada due to ‘sustained unprofitable market conditions’, and was anticipating further downsizing in its worldwide operations. ‘The one thing I have learned in this job,’ Boutte says, ‘is that there’s a big difference between geophysics as a science and geophysics as a business. If you don’t respect that, you won’t be in business very long.’ Putting WesternGeco back on track has required some tough decisions. Staff numbers are down one third since 2001.There are 12 3D vessels in the seismic fleet compared with 27 not so long ago. Once there were 48 land crews, now there are 19, actually an encouraging growth from a low of 14. It has been a difficult time, but Boutte has reason to look at the most recent two business quarters with some satisfaction. ‘Last quarter, operating income rose to 11%, so we’re getting closer to more acceptable levels of profitability. We’ll have to see what happens in the coming quarters with the overall activity, but I’m encouraged.’ According to Schlumberger’s figures released in April, WesternGeco contributed first quarter revenue of $313 million, which was 2% higher both sequentially and year-onyear. Pretax operating income of $34 million, improved $1 million on the previous quarter and by $34 million year-onyear. The pretax income year-on-year increase was mainly attributable to higher multi-client sales coupled with savings related to restructuring measures taken in 2003. Multi-client sales also drove sequential improvement in operating income thanks to increased sales, partially offset by sluggish marine seismic activity. Including multi-client pre-commitments, the backlog at the end of the first quarter reached a healthy $479 million, 17% up on the previous quarter. The way Boutte sees it, ‘some of the players in this business are a little euphoric right now due to the slight increase in multi-client sales. This does not change our view that the fundamental business model must continue to evolve towards one that is driven by custom-designed proprietary surveys aimed at specific targets.’

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2004-06-01
2024-03-29
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  • Article Type: Research Article
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