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Looking for Guidance: Subsea Outlook

1,395 Views | 5 Replies | Last: 4 yr ago by Vernada
BigAggie06
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AG
Background: I am an Internal Auditor at a medium sized oil field manufacturing company, we are fairly diversified with 3 segments and 6 product lines. I am looking to get out of audit and have two opportunities in the F&A organization which have popped up.

The first one, and the one that I have had the most discussions on is in our Subsea product line. I would be the accounting manager for for one of our subsea businesses. I've talked to the plant manager and the controller, and I am speaking to some more people today and I have several questions I want them to answer for me but my biggest concern is the general outlook for the subsea sector.

For the subsea business we are in (mainly manufacturing ROVs and ROV launch and recovery systems) is down. The jobs we have are making good money they just don't have a lot of them. The plant I would be over has 6 on going jobs (a few years ago they had on average 8-12) but 2 or 3 of those are nearing completion and will be shipped probably before I would rotate into the job. We are expecting more business but it is all from a single customer at this point in time. My concern is obviously that I would take this role and in 6 months I'd be basically just keeping the doors open hoping for more business to materialize and then in 12 months be presiding over the plant shutting down. We keep hearing about a recovery and how it has to happen eventually, and honestly that product line is the one that interest me the most within the company, I just doubt it's viability given the current state of things.
FarmerJohn
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AG
Quote:

We keep hearing about a recovery and how it has to happen eventually,

I have built subsea products for many years and am still with that company. It is likewise depressed here but over the last 4 years, the recovery is just 3 years down the road. Is it? I don't know. But never confuse hope with a plan.
dc509
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AG
In my opinion it just depends on your risk tolerance. A question worth answering to yourself is if the below happens what's the move for you then?

Quote:

then in 12 months be presiding over the plant shutting down.
BigAggie06
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AG
dc509 said:

In my opinion it just depends on your risk tolerance. A question worth answering to yourself is if the below happens what's the move for you then?

Quote:

then in 12 months be presiding over the plant shutting down.

Risk tolerance is very low lol ... the fact that I am even considering changing jobs is nerve wrecking for me. I don't believe though that it would be super risky for me if they did shut down the plant. My current role is a corporate role, I know a lot of people, a lot of well placed people, fairly well and I am generally well liked so I think they would find a spot for me. However, that always assumes that there is a spot to fill. My bigger concern with being in that situation would just be what that job would really entail.

What attracts me to the position is the the reporting and analysis side of things, partnering with the business to help make decisions, etc. but if there are no jobs there is nothing to analyze, nothing to report or advise on and the job become much more drudgery.

They don't really need an accountant, they have a very capable accountant that would report to this role, but that person is too busy just managing the books day to day and has no time (as well as not really the skill set) to analyze the numbers and provide insights. So I would say that the concern is less about being out a job and more about being stuck in a position that becomes mind numbing and unfufilling.
Dirt 05
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Other than your risk appetite for change this seems like a no brainer.

You are more marketable as someone who has been a finance manager in addition to your prior internal audit experience. That is a better place to be in a market downturn regardless of industry. Also, being in management and closer to revenue generation is a better place to be than a pure G&A department (internal audit).
badharambe
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AG
Sounds like a great opportunity. Seems like the oil price is in a range for now. I think stable for next 1.5 years (my current recession timeline based off yield inversions). recently talked to offshore manufacturers that are all light (sub 50%, multiple continents) on shop loading for next 2 years.

Only question in my mind: do losing money frackers go out of business and push prices higher with production declines or do they continue to produce and kill oil prices while suffocating themself?

Reality: Trump will do all he can to keep prices low. Even depleting our reserves (aka increasing national security risk) to keep the economy chugging.
(I work offshore)
Vernada
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Quote:

For the subsea business we are in (mainly manufacturing ROVs and ROV launch and recovery systems) is down.
There may be some areas of subsea worth taking a risk on - however, I wouldn't think this is one area where that is true.

When the bust started - say 2015/2016, one of the most overbuilt, overbought areas was 'light construction' vessels and ROVs.

I don't think that has changed - if anything, there is even more capacity now as more small companies have gone out of business.

I would think the 'used' ROV market will provide more than enough supply for the next few years - I'm not really sure why anyone would spend capex on new kit right now. There's no demand and there certainly isn't investment being made by the Oil Cos to help a contractor support that decision.
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