Sales: FFr 7.14 billion (US $1.22 billion)
Stock Exchanges: NASDAQ Paris
Ticker Symbol: CXIPY
SICs: 1623 Water, Sewer, & Utility Lines; 1629 Heavy Construction, Not Elsewhere Classified; 3569 General Industrial Machinery, Not Elsewhere Classified; 1731 Electrical Work
France’s Coflexip S.A. is the holding company for the operations of Coflexip Stena Offshore and subsidiaries, one of the world’s leading subsea contractors. Coflexip designs, manufactures, and implements systems and products that enable offshore and deepwater oil exploration and drilling, the laying and protection of telecommunications cables, and other subsea construction products, and is the world leader in the design and manufacture of subsea robotics systems. The company also provides turnkey design, engineering, and construction services. One of the pioneers in its field, Coflexip has played a prominent role in the development of ultra-deepwater projects; the inventor of flexible pipe is the world’s leading producer of systems permitting oil exploration companies to tap the vast oil reserves of the world’s oceans. In 1998 Coflexip has continued to break its own world depth records, laying flexible pipe at a depth of 1,709 meters and rigid pipe at 1,373 meters, both off the Brazilian coast. Coflexip expects to be able to break the 2,500-meter mark by the year 2000.
Coflexip’s primary activities are grouped under three interrelated divisions: Integrated Subsea Services; Engineering and Technology; and Deepwater and Ultra-Deepwater. The company’s subsea services include integrated, turnkey engineering, development, and project management services for new offshore installations and their activation, as well as the decommissioning and dismantling/abandoning of existing offshore facilities. The company designs, manufactures, and installs riser systems, flexible and rigid reeled pipe, and umbilical support systems and other subsea systems; Coflexip also designs and constructs offshore oil platforms and other floating production and mooring systems. In addition to these activities, the company’s Subsea Services division provides general subsea construction services and maintenance, repair, and inspection services to existing offshore wells and other offshore facilities. Coflexip continues to play a leading role in the design, development, and manufacture of new subsea systems, including the manufacture of flexible pipe capable of withstanding the corrosive and high-pressure environment of deepwater and ultra-deepwater installations.
In 1997 the company introduced its flexible Teta pipe design, developed at the company’s Le Trait, France engineering facility. The Product Engineering Division, based in Le Trait, and its Offshore Engineering Division, based in Aberdeen, Scotland, coordinate Coflexip’s new product design and development, with a particular focus, in the late 1990s, on supporting the company’s deepwater and ultra-deepwater activities. New technologies developed by this division in the late 1990s include the Teta pipe technology and Coflexip’s ground-breaking Flexconnect system, which enables the remote-controlled connecting of subsea pipe and umbilical systems. Flexconnect was developed in cooperation with the company’s Perry Tritech subsidiary, itself the world’s leading designer and developer of subsea and other robotics systems. The system permits the remote-controlled connection of pipe and other systems at depths beyond the limits of human diver abilities.
In the late 1990s Coflexip has increasingly focused on the booming deepwater and ultra-deepwater exploration and drilling activities of the world’s oil and energy companies. The creation of new technology, including the Teta flexible pipe design and the Flexconnect system, has enabled Coflexip to take a leading position in the world market for deepsea construction, as the search for petroleum products has brought the industry into the most profound depths of the world’s oceans. The company expects deepsea construction and services to provide a strong motor for its future growth.
Coflexip supports its services with an impressive fleet of pipelaying and ocean construction vehicles, permitting the company to fulfill simultaneous contracts throughout the world. With four pipelaying ships and seven equipped for in-water construction, Coflexip’s fleet is among the market’s largest, with capacities ranging from shallow sea waters to the deepest oil fields in the Gulf of Mexico and Brazil. Coflexip continues to expand its fleet, with an emphasis especially on increasing its ultra-deepwater capability. The company’s pipelaying vessels also are equipped with trenching equipment, permitting the company to fulfill both activities. The company’s chief areas of activity are in the North Sea, especially in the United Kingdom and Scandinavian countries; North America, including a participation in the Terra Nova field development in Canada and in the Gulf of Mexico; Brazil, chiefly in conjunction with the company’s exclusive contracts with the Brazilian government’s Petrobras group; and to a more limited extent in the Asia Pacific and African regions. Long present in the United States, Coflexip increased its U.S. activities in 1997, with the purchase of a 25.6 percent stake in Houston, Texas’s Cal-Dive International; in 1998 Coflexip and Cal-Dive created the joint venture Quantum Offshore Contractors, focusing on the booming oil and gas field developments in the Gulf of Mexico.
Coflexip has been listed on the NASDAQ stock exchange since 1993 and on the Paris stock exchange since 1994. After a restructuring in the mid-1990s, the company is led by chairman and CEO Pierre Valentin, who led Coflexip to sales of FFr 7.32 billion in 1997, from 1996 sales of FFr 4.9 billion, an increase of 49 percent. The company’s 1997 net profit reached FFr 553 million (US $92 million). Approximately 65 percent of the company’s sales are provided through its contracting services. Some 60 percent of the company’s revenues are provided by its activities in the North Sea.
Subsea Pioneer in the 1970s
Flexible pipelines, which would revolutionize the offshore oil industry, were introduced by the French Petroleum Institute in 1971. During the 1950s, the French government, under the leadership of Charles de Gaulle, had begun an ambitious program to develop the country’s oil and gas exploration and supply capacity, to counter the country’s lack of domestic petroleum resources. This program would inspire the creation of two leading oil companies, Elf and Total, as well as massive research efforts into new technologies under the French Petroleum Institute. The introduction of flexible pipeline technology led to the creation of Coflexip in 1971.
Coflexip’s original charter was to manufacture flexible pipe. The success of the new technology was given a strong boost in 1973 with the Arab Oil Embargo. Forced to recognize their dependence on the Middle Eastern oil wells, Western countries initiated renewed oil exploration efforts. Flexible pipelines enabled the exploitation of an entirely new part of the world—the vast petroleum fields located beneath the world’s oceans. To meet the growing demand, Coflexip began establishing a network of subsidiaries and branch offices to bring the company closer to worldwide developments in subsea oil exploration. In 1974 the company established its U.S. subsidiary in Houston, Texas. Coflexip had already expanded its manufacturing capacity to include, beginning in 1972, the production of umbilicals, or pipeline support systems. The flexible pipeline technology also was adapted to provide short-length and small-diameter piping used for general exploration and refining activities.
The most natural market for Coflexip’s technology was France’s North Sea coastline, which would undergo intensive development in the 1970s and 1980s. The North Sea region would remain the company’s principal market into the 1990s, accounting for more than 60 percent of the company’s 1997 revenues; its implantation in North America, however, soon was expanded to include South America as well. Coflexip formed its Brazilian subsidiary in 1977; in the mid-1980s the company opened a Brazilian-based manufacturing facility, in Vittoria, for the production of flexible pipelines for the growing Brazilian oil exploration market.
In the late 1970s and 1980s Coflexip developed beyond its original manufacturing mandate by adding support services to the petroleum exploration industry, including design, engineering, construction, and pipelaying services. These developments would lead the company to building its own fleet of vessels capable of serving the principal oil exploration markets throughout the world. In 1987 the company opened a new subsidiary in London, followed two years later by a branch office in Oslo, which permitted Coflexip to extend its operation further into the North Sea market. In 1990 Coflexip formed a joint venture partnership with the United Kingdom’s Dunlop Ltd. to create Dunlop Coflexip Umbilicals Ltd., later renamed Duco Ltd., which brought the company’s manufacturing capacity to Newcastle, England. Coflexip would acquire 100 percent control of Duco in 1995. By 1992 the company’s revenues topped FFr 1.8 billion.
Our mission is to support oil and gas companies worldwide through the provision of strategic products and services for the development and implementation of innovative sub sea solutions to increasingly complex field development situations.
Acquisitions in the 1990s
In the 1990s Coflexip stepped up the expansion of its services. Although its earlier development had come in large part through internal growth, the company began an engagement of acquisitions, adding new products and services capabilities that would more than triple the company’s sales in just five years. In 1992, the company, in joint acquisition with L.D. Canocéan, part of France’s Louis Dreyfus group, acquired another French company, Travocéan, which specialized in trenching and installation of trans-ocean power cables for the telecommunications industry. Later that same year Coflexip acquired Perry Tritech, based in Florida, the world’s leading designer and manufacturer of submarine robotic systems.
Further fueling its acquisition drive, Coflexip listed its shares on the NASDAQ stock exchange in 1993 and became one of the first French companies to introduce their stock on this market. The NASDAQ initial public offering (IPO) was followed a year later by a listing on the Paris stock exchange. The success of its public offerings enabled the company’s next (and largest) acquisition. In 1994 Coflexip agreed to purchase Stena Offshore N.V., a unit of the Swedish Stena AB conglomerate, principally in exchange for some 2.8 million Coflexip shares at US $40 per share, giving Stena nearly 18 percent of Coflexip’s stock. Stena Offshore specialized in the submarine petroleum installations; its focus on rigid and rolled rigid pipelines, as well as its geographical implantation, complemented Coflexip’s own flexible pipeline specialty.
The Stena acquisition would double Coflexip’s sales, which topped FFr 4 billion in 1995. Yet the merger of the two companies’ operations, begun in 1995, proved less than smooth. Adding to the companies’ difficulties that year was a number of technical difficulties, resulting in a drop in revenue growth. Meanwhile, the company began operations of a new manufacturing facility in Freemantle, Australia. The facility for production of flexible pipeline for the Asian market would face a struggle from the start, as the region’s weak oil exploration activity failed to bring the plant to full operational capacity. At the same time, Coflexip faced problems on another front. Among its acquisitions in the first half of the 1990s had been a number of principally France-based manufacturers of composite materials. Although composite materials were used in Coflexip’s primary subsea petroleum markets, the synergy between these activities remained difficult to achieve. By 1995 the company made the decision to exit the composite materials market, selling its newly added subsidiaries and forcing writedowns on these sales. By the end of 1995 the company posted a loss of more than FFr 100 million.
Coflexip’s difficulties proved short-lived, however. By 1996 the company was posting profits again, because of a reorganization of the company under new Chairman and CEO Pierre Valentine. Once again focused on its core subsea market, Coflexip also determined to step up its research and development into providing deepwater and ultra-deepwater capacity, as this category was poised to begin a worldwide expansion. The company soon would show initiative on several fronts, introducing its Flexconnect system, in conjunction with its Perry Tritech subsidiary, as well as a new pipelaying technology, and the Teta technology, which provided for stronger and larger riser systems. With a new steel production facility opened in Houston by its Duco Ltd. subsidiary and a new production facility in La Trait, Coflexip finished the 1996 year with revenues of FFr 4.9 billion and profits of FFr 70 million.
The company’s reorganization and refocus on its core activities, however, would show its full impact in 1997, as the company’s sales increased by 49 percent to top FFr 7 billion, placing Coflexip firmly among the world leaders in its market. Aiding this growth was the company’s acquisition of a 25 percent interest in Houston’s Cal-Dive International Inc., a submarine construction specialist operating in the Gulf of Mexico. In 1997 and 1998, Coflexip continued to show its technological leadership, establishing worldwide depth and pressure records for its pipeline installations. Although deepwater and ultra-deepwater pipelines remained a small percentage of the company’s sales, Coflexip clearly marked these areas for its future growth.
Coflexip Stena Offshore International (France); Coflexip Développement (France); Coflexip Stena Offshore N.V. (Netherlands); Coflexip Stena Offshore Ltd. (U.K.); Coflexip Stena Offshore Services Inc. (U.S.A.); DUCO Ltd. (U.K.); Coflexip Stena Offshore Norge A/S (Norway); DUCO Inc. (U.S.A.); Perry Tritech Inc. (U.S.A).; Flexservice N.V. (Dutch Antilles); Brasflex (Brazil); Flexibras (Brazil); Sigma (Brazil); Coflexip Stena Offshore Asia Pacific PTY Ltd. (Australia); Cal Dive International (U.S.A.; 25.5%); Travocéan (France; 50%).
Cosnard, Denis, “Coflexip renoue avec les profits,” Les Echos, March 27, 1997, p. 9.
Jemain, Alain, “Coflexip se prépare à l’offshore ultra-profond,” L’Usine Nouvelle, October 2, 1997, p. 37.
Remoué, Agathe, “Une connexion à très grande profondeur,” L’Usine Nouvelle, October 9, 1997, p. 86.
“Sur la bonne voie dans des marchés porteurs,” Petrole Informations, February-March 1997, p. 52.