Insights: Todd M. Hornbeck

Marine News
Wednesday, January 02, 2013

Chairman, President and Chief Executive Officer, Hornbeck Offshore Services, Inc.

While this month’s selection for our INSIGHTS feature needs no introduction to maritime and energy insiders everywhere, Todd Hornbeck’s professional journey is worth pausing to reflect upon. Hornbeck, Chairman, President and Chief Executive Officer of Hornbeck Offshore Services, Inc. (NYSE:HOS), founded the company in 1997. Until 2002 Mr. Hornbeck served as the President and Secretary of the company, when he was appointed Chief Executive Officer and then, Chairman of the Board in 2005. Hornbeck also worked for the original Hornbeck Offshore Services until 1996, serving in various positions related to business strategy and development. Following the merger of Hornbeck Offshore Services, Inc. with Tidewater in March, 1996, he accepted a position as Marketing Director – Gulf of Mexico with Tidewater, where his responsibilities included managing relationships and overall business development in the U.S. Gulf of Mexico region. He remained with Tidewater until the formation of Hornbeck Offshore Services, Inc. Today, Hornbeck serves as Chairman of Offshore Marine Service Association (OMSA) and Vice Chairman of the International Support Vessel Owners’ Association (ISOA). Follow along as he shows the way forward for Hornbeck Offshore Services, its customers, and the global energy industry.
 

Already operating one of the youngest and largest fleets in the water, Hornbeck is nevertheless pressing forward with an aggressive newbuild program. What’s the primary driver for this business decision?
Quite simply it is the evolving needs of our customers. We are not about growth for growth’s sake. We continue to strategically grow by anticipating our customers’ evolving needs and expanding the capabilities of our fleet to address those requirements. Our company was founded with a focus on the deepwater and ultra-deepwater markets, and as exploration and production activities expand further offshore and at greater well depths we believe our fleet must also continue to evolve. We see a flight to quality assets and operators and growing demand for larger, more capable vessels. 

Have you looked at LNG / Dual-Fuel power options for your vessels? Why are you choosing a different route for your tonnage?
We currently view LNG/Dual-Fuel powered supply vessels as a niche market, as only a few customers in our core markets have expressed interest in this solution. Their interest appears to be more driven by developing an alternative market for LNG than operational requirements. We have however evaluated LNG/Dual-Fuel alternatives and actually participated in a tender earlier this year. Based on our experience, it is clear there is a significant cost premium to construct and operate these vessels but we have not seen a corresponding premium in the day rates. Accordingly, we believe the route we have chosen is in the best interests of our customers, employees and investors.      

People always talk safety – you produce results. Your fleet owns a better total recordable incident rating (RIR) than most of your peers, as well as OMSA and IADC benchmarks. What’s your secret? 
There is no “secret sauce.” It requires an ongoing and significant investment in people and commitment from all levels of the company – most importantly a personal commitment to behave safely. It requires a relentless desire to drive toward zero incidents. Every year we have a large number of our vessels work incident free so we know “target zero” is an attainable goal. It also requires a commitment to “stop work” when conditions exist that unnecessarily increase the risks of injuring people or damaging the environment or property.

Spanning 9 geographic markets and six service lines, your market focus is diversified, but more than 50% of your equipment is U.S.-based. Where do you see those numbers in one year? Five years?
We believe our vessels can perform anywhere in the world. We will mobilize our vessels to markets that we believe over time will offer our investors the greatest return. Our focus has been on deepwater and ultradeepwater so we expect over time our core markets will remain the U.S. Gulf of Mexico, Brazil and Mexico. There are other international markets we will continue to work in opportunistically and further evaluate as we deliver our newbuilds. We will continue to participate in the construction, inspection, maintenance and repair markets. We will also continue to pursue specialty niches where innovative solutions are required and valued accordingly.

Regarding your newbuild program, you project that your already substantial fleet will grow by 75%by 2015. Quite simply, can the market sustain that kind of growth? If so, why and how?
We currently operate 51 offshore supply vessels and 4 multipurpose support vessels. We have 20 vessels under construction with options to build 44 additional vessels. We currently rank number 4 in the global new generation supply vessel market (152 companies and 1,132 vessels including 291 under construction) based on deadweight tonnage (6% of the total deadweight – roughly the same as Tidewater and Bourbon or in other words a three-way tie for 2nd in the world). Our core markets represent 41% of the world’s deadweight tonnage and we have a leading position in each of those core markets (#2 U.S. GoM, #6 in South America, and #4 in Mexico). The deadweight tonnage of our fleet will grow by more than 75% by 2015. There are a number of reasons why believe the market can sustain our anticipated growth. There are some macro factors that lead us to this conclusion including nearly 100 high-specification floating drilling rigs that are under construction. Also, it is not just the number of vessels but the types of vessels that will be required. Nearly 90% of the forecasted floating rig demand is in water depths of more than 3,000 feet and nearly 60% of the demand is depths exceeding 5,000 feet. These leading indicators, including projected growth in deepwater capital expenditures by our customers and the imbalance between depletion, production and consumption of hydrocarbons, suggest that larger and more capable vessels will be required to explore and develop more remote areas and at greater well depths.

As the “Flight to Quality” takes hold, is the oil & gas industry finally ready to pay for high-tech, fully modern tonnage while eschewing lower cost marginal players? In other words, is “going green” finally producing “green” for your bottom line?
In certain regions of the world, such as the U.S. Gulf of Mexico, we do see the “flight to quality.” We also expect it to see it evolve in other markets, such as Brazil. However, it is much more than just “going green.” It is more about total quality – people, equipment and performance. That level of quality requires a significant investment of resources. At the end of the day, we believe there will be fewer companies capable of consistently meeting the ever-increasing standards of our clients and the regulators of our industry, who in some cases have exacerbated the shortage of available human capital. Furthermore, costs continue to escalate so at this stage most service companies are simply trying to preserve their margins. So while there is a migration to higher quality operators and equipment, the bottom line will be driven by more favorable supply / demand drivers and cost control / awareness.

Your loyalty to U.S. yards in your newbuild programs is remarkable, especially when some of these hulls may someday be flagged out and deployed in foreign markets. You insist that pricing here is comparable to foreign yards – how did you achieve this and what else went into your decision process?
We believe the pricing we have received from the U.S. shipyards for our new construction program is competitive on a global basis. At approximately $7,500 per deadweight ton, we are at an attractive cost basis for new 280 and 300 class vessels. The scale and timing of our program provided us with valuable opportunity. However, price is not the only variable. We have added “optionality” by constructing vessels that qualify for coastwise trade under the U.S. Jones Act. Quality and schedule also are important variables in determining value and we believe the scale of our program, and the proven designs and shipyards we have selected, offer the greatest value to our investors. It was important to us that the vessel deliveries occur in 2013-2015, when nearly 60 newly constructed floating rigs are expected to enter the market.

You tout a diversified fleet mix of Multi-class OSV and MPSV tonnage that is capable of serving clients “from cradle to grave.” But, what does that mean exactly?
It means we have a fleet of diverse marine equipment that is capable of meeting many of our clients’ requirements across their enterprise. Our smaller, DP-1 vessels provide support to production activities while our larger DP-2 vessels support drilling operations. We have multiple vessels performing well stimulation services. Our DP-3 MPSVs support construction, inspection, maintenance and repair in addition to well intervention and decommissioning activities. Our 370 class vessels are the only vessels in the world multi-certificated by the U.S. Coast Guard as supply vessels, industrial / freight vessels, chemical tank ships, and oil spill response vessels. We expect our 300 class vessels will also fulfill multiple roles in the exploration and production cycle.
 

(As published in the December 2012 edition of Marine News - www.marinelink.com)

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter February 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Adani Ports Income Up by 15%

Adani Ports and Special Economic Zone Limited (“APSEZ”), India’s largest port developer and part of Adani Group, today announced the financial results for the quarter

Shipping Corporation Q3 Profit Surges

The Shipping Corporation of India (SCI) declared its unaudited financial results for the quarter ended 31st December 2015 posting a net profit of Rs. 59.66 crores as against a net profit of Rs.

Ice Condition 3 for Delaware Bay

The Captain of the Port (COTP), Delaware Bay is notifying mariners that Ice Condition 3 has been set for the Port which includes the Delaware Bay and River, the C&D Canal,

Offshore

Eni, Exxon, Statoil Win Irish Offshore O&G Licences

The Irish government said on Thursday it had awarded oil and gas licences to companies including oil majors Eni, Exxon and Statoil , allowing them to explore for hydrocarbons off the coast of Ireland.

Maersk Drilling Posts Record Profit

Maersk Drilling delivered the best result ever with a profit of USD 751m (USD 478m) in 2015 generating a ROIC of 9.3% (7.1%). The result was positively impacted

Update on Seagull Mobile apps for Crew

The Seagull mobile app for crew training status is set to revolutionise the way seafarers track their training records and receive critical safety alerts, by making

Energy

Eni, Exxon, Statoil Win Irish Offshore O&G Licences

The Irish government said on Thursday it had awarded oil and gas licences to companies including oil majors Eni, Exxon and Statoil , allowing them to explore for hydrocarbons off the coast of Ireland.

Maersk Drilling Posts Record Profit

Maersk Drilling delivered the best result ever with a profit of USD 751m (USD 478m) in 2015 generating a ROIC of 9.3% (7.1%). The result was positively impacted

Total Proposes 0.61 ‎€ per Share Dividend

The Board of Directors of Total met on February 10, 2016, and agreed to propose to the Annual Shareholders’ Meeting on May 24, 2016, a 2015 annual dividend of 2.

Marine Power

Cummins Expands Marine Tier 3 Product Line

Cummins Inc., a manufacturer of diesel engines and generator sets for the marine industry, has launched a new Onan marine U.S. Environmental Protection Agency (EPA) Tier 3-certified generator,

James Troop Supplies Engines for 3 Naval Vessels

Liverpool City Region (UK) based ship engine specialist James Troop & Co has won an order to supply Volvo Penta diesel engines for three European naval vessels being built on Merseyside.

Honda Marine on Display at Miami Boat Show

Honda Marine is set to market its complete range of outboard marine four-stroke engines at the 2016 Miami International Boat Show, February 11-15, 2016.   At this year’s show,

Vessels

Ice Condition 3 for Delaware Bay

The Captain of the Port (COTP), Delaware Bay is notifying mariners that Ice Condition 3 has been set for the Port which includes the Delaware Bay and River, the C&D Canal,

OSD Designs Research Vessel for TORI

Offshore Ship Designers (OSD-IMT) has signed a new contract to design an IMT2001 Scientific Research Vessel for the Taiwanese Ocean Research Institute (TORI).    The

Sea IT, Veritas Tankers Ink Long-term Software Deal

Sea IT has entered a long term ICT agreement with Veritas Tankers. The agreement comprises installation of BlueCORE Generation 4, an ICT platform specifically developed for the marine industry,

People in the News

Helsinki, Tyumen State Universities to form Arctic station

Within the framework of the international project Reeh, Tyumen State University in cooperation with the University of Helsinki are planning to create a unique Arctic observation stations.

Guy Harvey to be Honored by Seafarer's House

Guy Harvey – artist, conservationist and entrepreneur – has been selected as this year’s recipient of the Seafarers’ House International Golden Compass Award. The

Delia Succeeds Schmidt as Ohmsett Program Manager

MAR Incorporated has named John Delia the Program manager for Ohmsett – The National Oil Spill Response Research & Renewable Energy Test Facility, succeeding Bill Schmidt who retired in December 2015.

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Salvage Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1842 sec (5 req/sec)