CSS' Results Doubled Last Year

Tranlation of the recent Finansavisen Article written by Andrea B?rland [email protected]

Connector Subsea doubled the result last year, but so far this year has corona pandemic delayed the activity in the repair market. 

 In recent years, Bergen's based Connector Subsea Solutions has spent around 100 million kroner on new technology and on acquisitions to become the largest in the world on repair and remote welding of deepwater pipelines in the oil and gas industry. The investments have already begun to bear fruit.

Despite the fact that pandemics and volatile oil prices hit the oil companies' willingness to invest hard last year, this supplier traded for NOK 211.8 million, up from 83.2 million the year before. On the bottom line, the company is left with 50 million kroner, a doubling compared with 2019.

Working From Home

“We started 2020 with a solid orderbook, and have completed most of the projects, but something has also shifted for us” says CEO Ivar Kj?rvik Hanson to Finansavisen.

“The current year, on the other hand, will be not as good. The first half of the year has been calm, and I think it can be attributed to uncertainty as a result of the corona pandemic. With many working from home It's harder for operating companies to make decisions to maintenance programs”, says Hanson, and adds “But we have had a number of offers out where a decision should be just around the corner. They have been "Just around the corner" for a while now, so we expect it will pick-up during the summer”

500 million goal

Despite the fact that 2021 probably will not be as good as last year, the company maintains its aim for a turnover of NOK 500 million by 2025.

“Our core area, repairs of pipelines still has a growth potential. But we see the greatest opportunities within emergency preparedness, remote-controlled subsea welding and subsea distribution. These are markets we only just launched in” says Hanson.

In recent years, the company has invested in equipment for remote control repairs with a view to offering permanent preparedness to the operating companies. When something goes wrong, Connector Subsea can quickly fly the equipment from Bergen, out to installations around the world.

Hanson describes the concept as like an insurance club, consisting of several operator companies in the same region. The companies in the "clubs" share expensive equipment packages instead of each single Operator company bearing the cost alone.

“For us, it is an advantage that the operators have increasingly gone away from using divers, and thus asking for equipment that can be remotely controlled. A large part of the equipment

we have developed are designed to carry out diverless operations” says Hanson.

Small change

The Connector Subsea manager admits that this will be an expensive service. “We sent some equipment to The Gulf of Mexico this winter, it cost 5 million one way, but when something goes wrong it is small change seen in relation to what one loses in production revenues, these pipelines pumps in relatively large amounts of money.

“Besides” Hanson points out “it is it expensive to have crews and ships just lying in wait. What you have ordered must turn up.” He estimates it could take six to twelve months to produce new equipment to carry out a repair, if one is not a part of a contingency cooperation or has invested in such capacity themselves.

Today, the company has nine customers which forms a "club" in the North Sea, in addition to being a key supplier to Equinor's emergency preparedness base for the Norwegian continental shelf. Connector Subsea sees particularly great potential in West Africa and Brazil where it already is developed at great depths.

Awaiting the pandemic

“A rough estimate is that there is potential for 20-30 such clubs worldwide. In the course of a few years we hope to have a market share of 15–20 per cent, of a market we estimates to be about 500 million kroner” says Hanson.

“We think it is a realistic, and maybe even a careful projection”

 However, the development of the emergency preparedness market is only in its infancy, Hanson says that the company has had online encounters with potential customers, but that he does not believe it accelerates before it becomes possible to again travel around and meet face-to-face.

“But in a couple of years we think this constitutes a not insignificant part of our income”