Pride International, Inc.
Pride International, Inc.
Incorporated: 1966 as Pride Oilwell Service Company
Sales: $1.71 billion (2004)
Stock Exchanges: New York
Ticker Symbol: PDE
NAIC: 213111 Drilling Oil and Gas Wells; 213112 Support Activities for Oil and Gas Operations
As one of the world's largest drilling contractors, Pride International, Inc., provides contract drilling, maintenance, workover, and engineering services to oil and gas companies worldwide, operating both offshore and on land in more than 50 countries and marine provinces. Pride also designs specialized drilling equipment and provides project management. Headquartered in Houston, Texas, the company has more than 13,000 employees representing 50 nationalities and has offices in Africa, Asia, Europe, and South America. Pride operates in the world's most active exploration and production areas, with a market presence in West Africa, South America, the Gulf of Mexico, the Mediterranean, Middle East and Southeast Asia. The company's global fleet of 288 rigs comprises a marine fleet of 61 rigs that include ultra-deepwater drill ships, deepwater semisubmersibles, jackup rigs, tender-assisted barges and platform rigs, which operate in West and South Africa, the Gulf of Mexico, the Mediterranean, the Middle East, India and Southeast Asia, and the North Sea. Pride also operates 227 land drilling and work-over rigs in South America, North Africa, the Middle East, Chad, and Kazakhstan. The company is organized under five operating segments: Eastern Hemisphere, which covers off shore and land drilling activities in Europe, Africa, the Middle East, Southeast Asia, Russia and the Commonwealth of Independent States; Western Hemisphere, which includes off shore drilling activities in Latin America; U.S. Gulf of Mexico, which comprises the U.S. offshore platform and jackup rig fleets; Latin America Land; and E&P Services.
Pride International dates to 1966 when it was founded in Alice, Texas, as the Pride Oilwell Service Company with six workover rigs. In 1978, the company was acquired by Dekalb Corporation and operated as wholly-owned subsidiary until August 1988, when Pride Petroleum Services, Inc. (another subsidiary of Dekalb) became the surviving corporation of a merger on June 24, 1988, with Pride Oilwell Service Company. As a result of these events in 1988, Pride emerged as an independent public company trading on the NASDAQ and soon began a series of acquisitions to grow the business.
In 1989, Pride expended approximately $4 million in cash and/or Pride common stock to make several acquisitions, including the operations and facilities of El Campo, Texas, and Lovington, New Mexico, districts of Alliance Well Services, Inc. and the fixed assets of Mack Chase, Inc., including 17 well serving rigs. The company also acquired 12 well-servicing rigs from Eagle Creek Mining and Drilling of Tact, California, and took part in the new market of Horizontal Drilling by providing rigs to horizontally re-drill wells.
1990–2000: ACQUISITIONS AND EXPANSION OVERSEAS
In 1990, Pride's aggressive business expansion comprised the acquisitions of the fixed assets of Ranger Well Service, Inc. and East Texas Packer Sales and Service, Inc, including 12 rigs in East Texas. Nine oilfield companies, including 83 rigs, were also acquired, bringing Pride's total number of well-servicing rigs to 409 and its total of all U.S.-based well serving rigs to seven percent. Pride increased its operations in West Texas with the purchase of Snyder Well Servicing and C.R.C Source Services, as well as its South Texas and South Central Texas activities with the acquisition of Reading & Moore Well Service, OK Well Service, South Texas Swabbing, and two rigs from Pacer Atlas. In December 1990, the company also bought Valley Hyperclean, a California oilfield services firm that specialized in well bore cleaning and production enhancement.
In 1991, the company formed Pride International, Inc. as wholly owned subsidiary after executives from Kuwait Petroleum Company requested urgent assistance to help restore that country's oil fields following the Persian Gulf War. To begin the restoration work, Pride deployed seven swabbing rigs and crews to Kuwait in the last week of April. In May, the company acquired ten well-servicing rigs as well as support equipment and an operating location in Liberty, Texas. It further ventured into the international arena when Quintana Trading Company, a subsidiary of Quintana Petroleum Company of Houston, Texas, selected Pride to work on their POVH field workover project in Tyumen Province in Russia. By the end of 1991, with the acquisition of 17 more well-servicing rigs in December, Pride's domestic fleet of rigs totaled 437 operating in 29 locations.
As a result of the Quintana deal, in 1992, Pride International shipped one rig to Russia as part of the joint U.S./Russian project in Western Siberia, later augmented in 1993 by two additional rigs and other heavy support equipment. The international subsidiary also leased two Pride rigs and support equipment to a Venezuelan firm, expanding its global reach into South America. Venturing further into South America, in 1993 Pride bought a controlling interest in an Argentine drilling and well-servicing company with a fleet of 23 rigs. The company also purchased a 100 percent interest in a Venezuelan drilling and well-servicing company with 12 well-servicing and three drilling rigs. Pride acquired the Bos∼nos Aires firm from Western Atlas International, renaming it Pride Petrotech Sampic. The acquisition of Perforaciones Western CA (renamed Pride International C.A.), an established contractor in Venezuela, came with the option to purchase an affiliated Columbian firm.
In 1994, Pride International continued to expand operations in Argentina by acquiring a local competitor with four rigs and by sending 17 additional rigs to the country, increasing the Argentine rig fleet from 23 to 43 rigs. In addition, as Pride more than doubled in size, it also began marine operations in Venezuela, building two state-of-the-art drilling/workover barge rigs and contracting them to a subsidiary of the Venezuela national oil company. In March 1994, Pride acquired X-Pert Enterprises, Inc. of Hobbs, New Mexico, a provider of lease maintenance service with 35 rigs. Pride also expanded its existing fluids hauling business with the acquisition of an oilfield trucking fleet in East Texas. In June, 1994, Pride's acquisition of the largest fleet of platform workover rigs in the U.S. Gulf of Mexico gave it a fleet of 22 rigs comprising 45 percent of the regional market.
At Pride International, we put customers first. They are the reason for Pride's existence. We are committed to providing quality services as measured by value to our customers, meeting or exceeding their requirements in a safe, cost effective manner, on time, the first time, every time. We will conduct our operations in a safe, environmentally sound, and socially responsible manner while maintaining the highest ethical standards. We will provide a work environment that encourages total participation and development of all employees through the full utilization of their skills, creativity and innovation. And we will strive for continuous improvement in all facets of our business.
Pride's rapid pace of growth and acquisitions continued throughout the remainder of the 1990s. In March 1995, the company acquired a 35-rig competitor in New Mexico, and in October, Pride International purchased Marlin Columbia Drilling Company, Inc. from the Royal Dutch/Shell group of companies. Quitral-Co S.A.I.C., a major competitor in Latin America, was acquired in April 1996, adding 110 land rigs and making Pride the largest rig contractor south of the U.S. border. In October 1996, the company tripled the size of its operations with the acquisition of Ingeser S.A., becoming the largest contractor in Columbia with a fleet of 19 intermediate depth rigs. When Pride sold its U.S. land-based well-servicing operations in February 1997, it completed its transition from a being domestic land well services company to one of the world's largest onshore and offshore drilling contractors. Operating under the name, Pride International, Inc., in March 1997, the firm acquired Forasol-Foramer, a French based drilling company with marine and land-based operations worldwide. Pride added 13 mat-supported jackup rigs acquired from Noble Drilling Corporation in May 1997, expanded its mobile off-shore drilling units with the acquisition of Piranha, a tender-assisted rig, and the Pride Pennsylvania, a 300-foot water depth independentleg cantilever jackup rig. In a joint ownership venture with Sonangol, the state-owned oil company of Angola, Pride began construction of the Pride Africa, one of two ultra-deepwater drill ships with the capability of working in water depths of up to 10,000 feet. The drilling ship was being built initially for drilling development wells in the huge Girrasol and Dalia fields off the coast of Angola. After being listed on the New York Stock Exchange, Pride issued 2,865,000 shares of common stock at an initial price to the public of $35 per share.
During 1998, Pride acquired a 60 percent controlling interest in the assets of Bolivia's formerly state-owned oil company, including 13 drilling and workover rigs, oilfield trucks, and related drilling equipment. Pride also signed an agreement through its subsidiary, Foramer S.A., with Elf Exploration Angola, for the construction and operation of a second new ultra-deepwater drill ship to operate off the coast of Angola. In October 1998, Pride completed the $85 million purchase of the M.S.V. Amethyst (renamed Pride South America ), a self-propelled semisubmersible drilling rig that could work in water depths of up to 4,000 feet. The rig was equipped to provide offshore drilling, deep well intervention, and maintenance and pipeline construction services. With the aim of further developing its deepwater fleet, Pride began participating in joint ventures to build, own, and operate six enhanced Amethyst-class semisubmersible rigs, which were to operate off the coast of Brazil under charter and service contracts with Petrobus Brasilia S.A.
In March 1999, Ray H. Tolson retired from his position as chairman of the board and chief executive officer, a post he held since 1975. Paul A. Bragg, Pride's president and chief operating officer since 1997, succeeded Tolson as CEO. He was additionally elected to fill the vacancy on the board of directors left by Tolson's retirement. In April 2000, Pride formed its Exploration and Production Services division after the acquisition of Servicios Especiales San Antonio S.A. from Perez Companc S.A. for $78 million and the assumption of $17 in debt. It also signed a contract to provide drilling and related services for exploration and development in the central African country of Chad. To pursue the project, the company ordered three new mobile drilling rigs and two high-performance workover rigs for work in Central Africa.
- Company is formed in Alice, Texas, as Pride Oilwell Service Company.
- Dekalb Corporation acquires Pride, operating it as a subsidiary.
- Pride emerges as an independent public company trading on the NASDAQ.
- Pride acquires two well servicing and drilling operations in Argentina and Venezuela.
- Pride acquires Latin American companies Quitral-Co S.A.I.C. and Ingeser S.A.
- Pride Petroleum Services is renamed Pride International, Inc., and is listed on the New York Stock Exchange; company sells its U.S. land-based well-servicing operation.
- Pride completes acquisition of the Amethyst I, a semisubmersible drilling rig.
- Pride begins operations in Kazakhstan with the first of two land rigs and delivers and installs the first of the deepwater rigs off the shore of Angola.
In January 2001, Pride was able to resolve longstanding difficulties concerning its deepwater rig contracts with the Brazilian state oil company. As a minority owner in the Amethyst project to deliver four rigs to Petrobras, Pride experienced three years of difficulties due to repeated delays and other problems, threatening the viability of the business deal. After months of talks between Pride and Petrobras, the Houston based company crafted a two-part deal. First, Pride agreed to a new five-year charter and service contracts enabling Petrobras to operate two of the four rigs. Second, Pride offered to acquire complete ownership of the two rigs, formerly known as the Amethyst 6 and the Amethyst 7.
2000 AND BEYOND: CONTINUED EXPANSION AND RESTRUCTURING
In May 2001, in a merger agreement that surprised Wall Street, Pride International, Inc. ended up being the buyer instead of the seller, purchasing rival Marine Drilling Companies in a $2 billion deal. The total value of the merger estimated at $6.2 billion fell to $4.2 billion within 24 hours after Pride's stock price collapsed 15.7 percent. The steep decline in share price came as the market soured on news that Pride would not be bought out by a larger firm. The combined company kept the Pride International, Inc., name and continued to trade on the New York Stock Exchange. The merger formed one of the world's largest offshore drilling operators with an offshore fleet of 77 rigs, including 2 drill ships, 11 semisubmersibles rigs, 35 jackup rigs, and 29 tender-assist barge and platform rigs. With this large global fleet, Pride was in a better position to compete for global projects. The merger further allowed the company to dedicate more cash flow to reduce its debts. In 2001, Pride also expanded its deepwater fleet with the completion of two deepwater semisubmersibles, the Pride Carlos Walter and the Pride Brazil, as well as obtained projects to construct and operate four deepwater platform drilling rigs, including the Kizomba (Angola), Holstein (Gulf of Mexico), Thunderhorse (Gulf of Mexico), and Mad Dog (Gulf of Mexico). Despite the rapid expansion of its global fleet of rigs, Pride International reported a loss for 2002 of $8.2 million, down from 2001 earnings of $127.2 million. The company attributed the earnings decline to weak conditions in the U.S. Gulf of Mexico jackup market, as well as to declining results for its international land exploration and production services operations due to decreased activity in Argentina and Venezuela.
In May 2003, Pride was awarded six new contracts by a unit of Mexican state oil company, Pemex, increasing its contract backlog by $220 million. In November, the Kizomba began operations for Esso Exploration Angola, a subsidiary of ExxonMobil Corporation, under a contract that was due to expire in 2008. Pride also began operations of two large land rigs in Kazakhstan on an artificial island in the northeast Caspian Sea. During the fourth quarter of 2003, Pride signed a ten-year contract extension for the drill ships, Pride Angola and Pride Africa, which would keep the rigs in continuous operation through 2010 at estimated earnings of $610 million. In 2005, the company announced plans to sell its 227 land rigs, or 25 percent of its total fleet, to become an all-marine rig supplier because of their lower rate of return than the offshore assets. The immediate priority of the company, which had a market capitalization of $3.3 billion, was to reduce its debt to a capital ratio to 30 percent from 38 percent. In June 2005, Pride International announced a change of leadership to carry out the company's new direction with the board of directors electing Louis A. Raspino to serve as the new president and chief executive officer, replacing Paul A. Bragg. Raspino had been serving as executive vice-president and chief financial officer since joining Pride in 2003. With global demand for oil and gas supplies skyrocketing with the rapid economic expansions of India and China, Pride International appeared to be well positioned to earn markedly better profits than it did in the 1990s.
Amethyst Financial Company, Ltd. (British Virgin Islands); Andre-Maritime Ltd. (Bahamas); Basafojagu (HS) Inc. (Liberia); Bigem Holdings N.V. (Netherlands Antilles); Caland Boren B.V. (Netherlands); Criwey Corporation (Argentina); Davana Finance S.A. (Panama); Dundee Corporation (Liberia); Forafels Inc. (Panama); Foral S.A. (France); Gisor UK Ltd.; Martin Columbia Drilling (British Virgin Islands); Petrodrill Corporation Ltd. (Bahamas); Pride Offshore, Inc.
Nabors Industries Ltd.; Saipem S.p.A.; Transocean Inc.
Akani, Fred, "Pride Building Drillship for Angolan Prospects," Offshore, November 1997.
"Drilling Co. Looking to Sell Assets," Corporate Financing Week, May 30, 2005.
Eisen, Peter, "Pride International's Venture with YPFB Signals Effort to Diversify in Latin America," Oil Daily, May 26, 1998.
"Merging Contractors Pursuing Drilling Rig Contracts on a Package Basis," Offshore, September 2001.
"Pride Announces Acquisition of Dynamically Positioned Semisubmersible Rig," PR Newswire, April 7, 1998.
"Pride Finalizes Joint Venture with Sonangol for Dynamically Positioned Drill Ship," PR Newswire, January 26, 1998.
"Pride International to Sell 4 Rigs for $25.5 Million," America's Intelligence Wire, June 27, 2005.
"Pride-Marine Drilling Combination Would Create a Solid Jackup Competitor," Petroleum Finance Week, May 28, 2001.
"Pride, Marine Drilling Merge in $2 Billion Deal," Oil Daily, May 25, 2001.
"Pride South Pacific Commences Work in West Africa," PR Newswire, December 5, 2002.
"Pride Wins Praise for Resolving Rig Disputes with Petrobras," Oil Daily, January 30, 2001.
"Russian Group Touring U.S. Oil Operations," Oil and Gas Journal, December 16, 1991.
Spencer, Starr, "Pride Envisions Selling Land Fleet, Focusing on Offshore," Platt's Oilgram News, March 7, 2005.