Local and national investors alike have homed in on Vietnam’s natural resource reserves. PetroVietnam Drilling, which is only 11 years old, has seen its assets and revenue skyrocket since 2001
Officially founded in 2001, PetroVietnam Drilling and Well Services Corporation (PV Drilling) has come to be recognised as a pioneer among Vietnamese drillers and a reputable drilling contractor, as well as becoming a member of the prestigious International Association of Drilling Contractors (IADC), only 11 years after its establishment. Starting as a small repair and maintenance workshop, PV Drilling was keen to develop drilling services as its core business, and that determination ultimately turned it into a drilling contractor with five drilling rigs and the capability of providing a wide range of technical drilling services.
Most of the company’s major investments were put into building and purchasing onshore and offshore high-tech rigs, research and development activities to promote and apply advanced services
PV Drilling rocketed from a firm with $5m of total assets and $800,000 of net profit in 2002 to a corporation with approximately $900m of total assets in 2011 and around $50m after-tax earnings annually. Moreover, the corporation is ranked as the top drilling and drilling-related services provider in Southeast Asia, and as one of the best drilling contractors in the Asia Pacific region. The period 2005-2007 also saw many memorable milestones in PV Drilling’s development. In 2006, PV Drilling finished its equitisation and became one of the first companies in Vietnam’s oil and gas industry to be listed on the Ho Chi Minh stock exchange. In 2007, PV Drilling not only had its stocks evaluated as a blue-chip on the stock exchange, but also transformed into a group holding company with 12 subsidiaries in which the parent company focuses on drilling services while its subsidiaries concentrate on technical services and drilling-related services. With this structure, all of PV Drilling’s resources are specialised and strengthened.
With a vision of becoming an internationally reputable and reliable drilling contractor and drilling-related services provider in the oil and gas industry, PV Drilling has always been striving to show continuous improvement in services quality, increasing efficiency while maintaining the highest levels of safety and value for clients.
Competing with internationals
Since its establishment, PV Drilling’s management recognised the potential of Vietnam’s drilling market, which by that time was dominated by foreign drilling providers such as Transocean, Seadrill, Ensco, and others. As a result, a strategy of owning and managing new and modern drilling rigs – that would be considered as core business and leverage the reputation of PV Drilling – was created to claim back its home ground.
Despite huge difficulties and challenges at the initial stage, by consensus of all members of PV Drilling, the company’s first modern jack-up drilling rig, named PV Drilling I, was commissioned at the beginning of 2005 with the famous rig builder, Keppel Fels, and delivered to Vietnam in the second half of 2007. Since that moment, the company has officially operated a drilling rig and achieved strong results. At the same time, PV Drilling also bought a land rig and operated for a client’s drilling campaign in Algeria, marking its first step into a foreign drilling market. The success of the first jack-up wholly owned by a Vietnamese drilling contractor led to the investment in two more jack-ups – named PV Drilling II and PV Drilling III – both of which were completed in 2009.
While exploration and production activities in the shallow waters of Vietnam are about to turn mature with the dominant use of jack-ups, the immense potential of the deep water domain is starting to catch the eyes of operators. Spotting an upcoming trend, a Semi-submersible Tender Assist Drilling rig (TAD) was invested in by PV Drilling at the end of 2009. The rig was designed to perform under the extreme conditions of high pressure, high temperature wells, and in the harsh weather of deep-water areas. On February 14 2012, that TAD (dubbed PV Drilling V), officially came into operation for Bien Dong Petroleum Operating Company at Moc Tinh oilfield. At the time of writing, it has had more than 180 days of safe operation, with an efficiency ratio over 97 percent.
It is noteworthy that PV Drilling has only invested in and concentrated on its core business, comprising drilling and drilling-related services. This is the reason why PV Drilling has been immune to the negative impacts of the restructure wave in the country, overcoming the recession and developing in a sustainable way. The corporation provides services in oil and gas exploration and exploitation activities as follows:
- Managing and operating onshore and offshore drilling rigs;
- Providing drilling-related services;
- Providing high-tech well services through joint ventures with foreign partners including BJ Services, Baker Hughes, Expro Group, Oil States, etc.
Preparing for a market boom
Southeast Asia is witnessing a boom in energy demand, with lots of oil and gas projects set to be launched between 2012 and 2015, specifically in Vietnam with an estimated budget around $1.5–1.7bn annually. This scenario promises a busy schedule for drilling contractors. In fact, though most of the rigs are currently operating at maximum capacity, plenty of market space is still in line, just waiting for more rigs. PV drilling is accelerating its acquisition of new vessels to help it penetrate the international market.
Thanks to the serious awareness and strict compliance to safety practices of all PV Drilling staff, the company has maintained a remarkable health and safety record in all operations
Besides collaborating with international partners to charter new rigs, PV Drilling takes the further step of building or purchasing new vessels to catch up with the growing trend. For now, it is scouting opportunities for investing in one or two new jack-ups and then a Tender Barge. Its ambition in the next five years is to increase the capacity of its fleet until it includes up to five jack-ups, one land-rig, one TAD and 1 Tender Barge.
With a broad network of subsidiaries and joint venture companies, PV Drilling has accumulated the assets necessary to provide sustainable development and added value for clients. One significant event in 2011 was the establishment of PVD-Baker Hughes JV, the joint venture between PV Drilling and Baker Hughes, which is one of the best technical well service providers. The core business of this joint venture is providing high-tech services comprising directional drilling, well completion, fishing, MWD and LWD, coring, wireline logging, etc. In the first year of operation, PVD-Baker Hughes JV has occupied almost 75 percent of Vietnam market. PV Drilling also has joint ventures with well-known foreign partners such as BJ Services, Expro International BV, Marubeni-Itochu Tubulars Asia, Oil States and Vietubes, all of which contribute to the corporation’s total revenues and net profit.
During the past few years, PV Drilling has considerably improved the effectiveness of risk management activities in all three aspects of corporate governance: business strategy, finance and operation. As an oil and gas firm, it developed a clear business strategy revolving around its core business – drilling and drilling-related services. Most of the company’s major investments were put into building and purchasing onshore and offshore high-tech rigs, research and development activities to promote and apply advanced services, and upgrading machinery and equipment, as well as training human resources. The company now possesses a modern rig fleet, capable of adapting to the demand of drilling from shallow- to deep-water territories, and the capability to perform a diversified range of drilling-related activities.
Surfacing as the primary concern in the industry during recent years, particularly after the oil spill catastrophe in Mexico Gulf, PV Drilling believes that health, safety and environmental issues are the most significant factors in the sustainable growth of every oil and gas company. Over the years, the company built up an HSEQ Integrated Management System (IMS), which is certified with ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007. Thanks to the serious awareness and strict compliance to safety practices of all PV Drilling staff, the company has maintained a remarkable health and safety record in all operations, receiving IADC-certification for five consecutive operational years without Lost Time Incidents (LTI) for PV Drilling I. The other two jack-up rigs have also achieved zero LTI since 2009.
In order to keep the company’s operations running smoothly, the allocation of funding in a timely manner is also a matter of great importance. To avoid risk due to unbalanced cash flows, PV Drilling implemented a close monitoring policy of all financial activities, particularly through a centralised treasury system designed to optimise cash flow and ensure capital is always available for operations and investment. The impact of other issues – such as cost control, interest rate control and exchange rate fluctuation – were all put under surveillance at management level to avoid having to deal with unexpected circumstances.
Besides focusing on domestic operation to ensure national energy security is in compliance with the guidelines of Vietnam National Oil and Gas Group, PV Drilling also considers expansion to overseas markets as a significant target in the strategy of sustainable development. In fact, the past few years have seen the company make numerous efforts to take its services beyond Vietnam territory and, so far, the name ‘PV Drilling’ has appeared in Malaysia, Indonesia, Myanmar, and Cambodia, and even in farther-fluing countries such as Mexico and Algeria. For instance, the land rig PVD 11 has been in Algeria since 2007, and currently operates safely and effectively under a three-year contract for GBRS in Hassi Messaoud. A representative office has just been set up in Kuala Lumpur, ready to launch the company’s services into the Malaysian market and countries in Southeast Asia. There are further plans to spread the banner of PV Drilling farther and farther afield.
PV Drilling’s efforts have seen World Finance award it the award for Best Oil and Gas Drilling Contractor in Asia, 2012. That should read as proof of the company’s readiness to join the global playground, and PV Drilling is so already confronting new challenges and reaching for new heights on a global scale.