Global Industries, Ltd. Business Information, Profile, and History

Company Perspectives:

Global Industries' reputation for integrity and the company's dedication to providing quality work began a quarter century ago. We are continually looking to the future, diversifying services, enhancing equipment capability and attracting new people to our team of experienced professionals. Global is recognized as a leader in its commitment to servicing the needs of the industry&ndashøday, tomorrow and into the next century.

History of Global Industries, Ltd.

Global Industries, Ltd., headquartered in Carlyss, Louisiana, is a major constructor of offshore oil and gas drilling platforms and pipeline systems. Although it principally serves the oil industry in the Gulf of Mexico, it has, as its name suggests, worldwide operations and has installed pipelines in the Pacific Rim, India, Mexico, West Africa, and the Middle East. In addition to installing and removing pipelines and platforms, Global provides diving and marine welding services for repair and salvage operations. William Doré, something of an oil-industry legend, founded Global and is still its CEO. He also owns about 31 percent of the business.

1973--74: William Doré's Risky Venture Pays Off

Global Industries traces its founding back to 1973 when Louisiana native William Doré bought a small business, Global Divers, from Ebb Lemaster. Global Divers, established in 1964 by Dick Evans, went to Lemaster after some company shuffling arrangements that started when Evans sold his parent company, Dick Evans Divers, to a third party. Lemaster developed Global Divers into a small but successful firm specializing in offshore platform inspection, pipeline repairs, undersea construction, and oil drilling support. In 1970, he hired Doré, who, at the time, was trying to convince Lemaster to transfer his business profit-sharing funds from a bank certificate of deposit into mutual funds. Impressed by Doré's business savvy and determination, Lemaster hired him to head up Ebbco, a new diving-equipment rental company. Then, in 1972, when Ebbco grossed $500,000, Doré bought 49 percent of the company, using funds borrowed from his in-laws.

By 1973, Global Divers was hit with some serious reverses, in part because two major platform fires prompted regulations that discouraged new drilling in the Gulf of Mexico. The company's revenue plummeted to $200,000 from highs that at the end of the 1960s had reached $3 million. Faced also with equipment certification problems, Lemaster decided Global was about to fail, a view that Doré did not share. As a result, he offered Doré full ownership of Global in exchange for Doré's 49 percent interest in Ebbco. Despite the great risk involved, Doré agreed to the exchange and on May 3, 1973 became Global's sole owner.

With financial and logistical support from both family and friends, Doré began an energetic effort to turn Global once more into a viable, money-making operation. He badly needed equipment and personnel, and in both cases he had some initial good luck. He managed to rent an old broken down winch truck for a dollar a year and hired a former Lemaster employee, Joe Thornton, who proved to be a very versatile and dedicated worker. Doré's major problem was finding qualified divers and retaining them, and at the beginning he only had two who were committed to the company. He also needed to promote the company and find customers, tasks at which he excelled, even in the face of industry rumors that Global was teetering on the brink of insolvency. Within three months of taking over the company, he landed a $300,000 contract with Marathon Pipe Line of Findlay, Ohio, and shortly thereafter was able to land a Small Business Administration loan for $250,000. Those funds allowed Global to replace equipment that did not meet certification codes imposed by the Coast Guard.

1975--84: Global Grows at a Slow but Steady Pace and Begins Diversifying

Over the next decade, Global grew gradually but steadily. Its focus remained strictly on the oil industry in the Gulf of Mexico. In 1975, the company built a 10,000-square-foot operations and sales facility in Lafayette, Louisiana, where Doré had moved his family the previous year. Lafayette was rapidly becoming the hub for oil service companies providing logistical support for offshore drilling in the western Gulf. Global quickly began expanding its operations through the purchase of new equipment, allowing it to offer diving services for oil companies with platforms in deeper offshore water than it could initially manage. The company employed divers to help lay and repair undersea pipelines and install platforms as well as perform repair and salvaging operations.

In 1975, with its purchase of Pipelines, Inc., the company also began diversifying by laying pipelines using its own divers. Pipelines, Inc., using two pipeline barges, had been installing small-diameter pipe in shallow depths, up to 35 feet, for well over a decade. The opportunity to buy the company came after its owner, Eddie Lennard, suffered a heart attack. Lennard, who had contracted Global's services, was Doré's friend, and he wanted to sell him the business. Trusting his friend's business acumen, Lennard carried a note for Doré, who was not able initially to finance the buyout. Global moved the newly acquired business to a site on the Industrial Canal in Belle Chase, just a few miles away from Doré's original office in Harvey, Louisiana.

Global also undertook to train its own divers for working in the deeper waters into which the offshore drilling companies were moving through the oil boom of the 1970s, although special training was also necessary in the shallower, muddier water, where visibility could be zero and much of Global's earliest diving services, in support of its own pipe-laying operations, were needed. Doré and his staff were well aware that future demands for Global's services, including pipelaying, would take their divers into deeper waters. Among other things, they added a third barge to Pipeline's small fleet. A converted Central Marine Service vessel dubbed MAD III, the new barge could lay pipe in depths of up to 100 feet. Following that, Global began building its own vessels, starting with the GP 35, designed with the help of Ivan L. Garzotto, an engineer who joined Global as executive vice-president in 1978. It soon added the GP 37, a vessel equipped with a crane capable of lifting 140 tons and laying pipe to a depth of 300 feet.

Meanwhile, Global's divers, contracted for offshore work for other companies, were going deeper and deeper. By 1978, when Global contracted for the construction of a saturation diving system allowing divers to work in depths up to a 1,000 feet and maintain the pressure of that depth in a bell at the surface, the company had come up with its unique advertising slogan: 'We've worked our way to the bottom!' Doré was also adding new, diversified services. In 1978 he incorporated Navigational & Safety Aids (NSA) to make, sell, install, and maintain navigational aids for offshore oil rigs, including domes for covering abandoned subsurface structures. Doré later sold NSA to his daughter and son-in-law.

It was also in the late 1970s that Global purchased a remote controlled vehicle (RCV) system nicknamed the 'eyeball.' It was basically a mobile video camera mounted on a frame. Equipped with thrusters and controlled from the surface, the eyeball could perform underwater reconnaissance and inspection without having to deal with such problems as diver decompression. So successful was the first of these units that by 1980, the year in which it computerized its operations in both Lafayette and Belle Chasse, Global added a second system. It also added a Honeywell Acoustic Tracking System (ATS), which, by using underwater acoustic beacons, permitted very accurate subsurface position tracking for use in tandem with RCVs.

Such new, state-of-the-art equipment helped Global position itself as an important and dependable diving company for construction, drilling, and production support at ever-increasing offshore depths. For example, it garnered important industry notice when, in the summer of 1982, it began helping Union Oil build an offshore oil platform at a Gulf site in almost 1,000 feet of water. Dubbed 'Cerveza,' the platform was built far more economically than a platform named 'Cognac' that, some years earlier, Shell Oil had built at a similar depth. That same summer, using its saturation diving system and RCV, Global completed repairs on a pipeline for Columbia Gulf Transmission, working at depths of over 350 feet. It worked around the clock, saving that customer a considerable loss in revenue.

1985--92: Global Takes Advantage of the Oil Bust

When the oil bubble burst in the mid 1980s, all oil service and support companies had to undertake some belt-tightening measures, and some did not survive. Global managed to fare well despite the slowdown and recession. In fact, before the bottom fell out, Global had established itself in the Gulf of Mexico as a full-service diving company with the ability to lay pipe in up to 300 feet of water. Under Doré's prescient direction, the company proved willing to try new strategies for dealing with old problems and to invest in new equipment for future contingencies. For example, in 1985, as the industry was quickly tumbling, the company lost an opportunity for a major job with Shell Oil requiring the use of Global's saturation system. Global could not truck it to the Shell site in Texas because laws prohibited transport of oversized equipment over the weekend. As a result, Global procured a 'mini' saturation system for jobs requiring an emergency response, even on weekends.

That sort of flexibility helped Global find and develop markets for its special services. In the mid-1980s, it became a major provider of wet welding services, something that other diving service companies were minimizing. In 1984, realizing that existing and future regulations would require considerable repair on the subsurface structures of existing production platforms, Doré hired C.E. 'Whitey' Grubbs, former president of D & W Underwater Welding, to establish what became the country's most advanced underwater welding research facility. With the help of another man, Tom Reynolds, a welding engineer, Grubbs established a consortium with the Colorado School of Mines for developing subsurface welding techniques at various depths. At Global's Research and Development Center in Louisiana, divers learned the necessary wet welding techniques they put to practical use in the offshore oil patch.

Despite its growth and diversification, by the mid-1980s Global was still not competing with the much larger offshore construction firms like Brown & Root, J. Ray McDermott, and Santa Fe, all of which could lay large diameter pipes in depths up to 1,000 feet and had been growing very rapidly during the oil boom period of the late 1970s and early 1980s. Comparatively, Global was playing in a minor league, but in Bill Doré, the Coach, it had a team leader who knew a slump was inevitable and was positioning his firm to cope with it. He planned to take advantage of it when the downturn came and even at the height of the boom was creating a cash reserve while other firms were overextending. When the full collapse came in the winter of 1985--86, Global survived through an aggressive effort to find jobs, no matter how small, but it also began adding equipment it acquired from companies divesting assets in their own attempts to survive the hard times.

The major acquisitions that would transform Global into a major offshore, deepwater, turnkey contractor began in 1987 when, for $2.5 million, the company purchased the pipelaying assets of Sea-Con Services, Inc., including two barges, one of which, Sea Constructor, was capable of laying larger pipe at greater depths than any other vessels then owned by Global. The sale also gave Global a 15-acre site at the Port of Iberia in New Iberia, Louisiana, as well as important patents and exclusive rights to Sea-Con's wet welding technology.

It was also in 1987 that Global formed a partnership with Santa Fe, a major offshore drilling and construction company operating in international markets. Santa Fe, originally founded in Los Angeles in 1946, had been acquired by the Kuwait Petroleum Company (KPC) in 1981, at the height of the oil boom, and when oil prices bottomed out in the mid 1980s, KPC looked for ways to save its investment. Under the agreement, Global got a 49 percent share of the partnership and access to Santa Fe's equipment and markets.

In 1989, Global added Sea Cat to its fleet, a diving support vessel that improved its diving capabilities. Thereafter, in 1990, Doré acquired selected assets from Santa Fe at a bargain price of about $15 million. One major asset was the Chickasaw, a 270-foot pipelaying and construction barge that used a special reel technology which allowed it to lay pipe both quickly and efficiently. Two other acquired assets were the Cherokee, a 350-foot barge capable of laying large-diameter pipe in 800-foot depths, and another vessel, a dedicated bury barge named Tonkawa, which, though smaller, was still larger than the vessels used by Global before its partnering arrangement with Santa Fe. Also included in the sale were saturation diving systems (two capable of 1,500-foot depths) and an equipment yard in Houma, Louisiana. Altogether, these assets transformed Global into a company capable of laying pipe in depths up to 1,000 feet, a major turning point in its development. It was also in 1989 that Doré incorporated Pelican Trucking, a Global subsidiary created to reduce the cost of transporting Global's equipment to oil company docks on the Gulf Coast.

Although the purchase of Santa Fe's holdings and market slowdown led to problems in the first part of the 1990s, by June 1992 Global was again ready to invest in further expansion. At that time it bought Teledyne Movible Offshore's construction holdings, including three large derrick barges, two of which had a lifting capacity of 800 tons. Because new construction in the Gulf had come to a standstill, it was a risky venture that required some creative financing and some additional belt tightening. The company got help from an unexpected quarter, Hurricane Andrew, which roared across the Gulf oil patch in late August of 1992, leaving extensive damage. Suddenly Global had all the salvage and repair operations it could handle. The company also completed plans to go public in 1992, making its initial public offering in the winter of that year. The stock sale allowed Global to pay off its debt to Teledyne, which had agreed to carry the note financing the sale of its assets to Global.

1993--2000: Global Takes Its Operations Wider and Deeper

By 1993, the offshore oil industry had begun recharging, entering a deepwater revolution that was driven by technological breakthroughs that allowed drilling operations in ever increasing depths, moving far beyond the 1,000-foot limit established in the pre-bust boom in the early 1980s. Refinements in 3-D seismic technology permitted the pinpointing of promising formations at water depths of up to 10,000 feet, in turn calling for new or greatly modified drilling, diving, and construction systems.

Thanks to its earlier investments in equipment and its willingness to adapt to the demands of newer technologies, Global was ready to meet the deepwater challenge. It undertook extensive changes to vessels that it already owned, notably the Chickasaw and its reel-laying system. In 1994, Global invested about $9 million in upgrades that allowed the Chickasaw to lay pipe in depths up to 6,000 feet. Still, the company had to build or acquire other equipment, such as the Hercules, a very large, flat-bottom barge which Global purchased for $10.9 million from J. Ray McDermott in 1995 and retrofitted for deep water service at a cost of over $100 million. In 1998, with its final testing completed, Hercules began working as the most versatile and largest barge in Global's fleet, with a heavy load lifting capacity and ability to lay pipe up to 42 inches in diameter in depths up to 8,000 feet.

Throughout the 1990s, Global also built, commissioned, or purchased other important deep-water vessels and equipment. For example, in 1995 it bought the Mohawk, a 320-foot derrick and pipelaying barge operating in Indonesia. It also commissioned the building of the Pioneer, a 200-foot, semi-submersible dive-support vessel capable of working in 12-foot waves and staying on station in seas running up to 20 feet.

Throughout the 1990s, besides building, buying or modifying vessels in its fleet, Global was taking other important steps to both diversify its capabilities and hone its competitive edge. In 1993, it acquired The Red Adair Company, the high profile outfit made famous for its successful well-capping exploits throughout the world. To the well control services which that purchase provided, it added much improved deep-water, well-intervention services when, in 1995, it purchased ROV Technologies. By that time it had also purchased lift or jackup boats (self-propelled, self-elevating work platforms) for its growing fleet of specialized vessels, initially with a purchase of sixteen from Halliburton in 1994. In 1996, when it built two new liftboats capable of working in waters up to 180-feet deep, Global became the principal operator of liftboats in the Gulf of Mexico.

The expansion of Global greatly accelerated through the second half of the 1990s. Some of the technological advances that accounted for its ability to work at ever increasing depths led to a resurgence of shallow water drilling, notably the 3-D seismic technology. Global was in an enviable position to benefit, having the equipment and know-how to work at shallow depths, but because the company's focus had shifted to deeper water operations, Doré knew that the shallow-water pipeline division needed to be overhauled. In 1996, Global took a major step in that direction when it purchased Norman Offshore Pipelines, Inc. and created a new Coastal Division in New Iberia.

Partly as a result of its acquisitions, but also through careful planning, Global was also expanding into international markets, becoming truly global in its operations. To facilitate the deployment of its resources, Doré put together a management team, headed by Mike Buckley. Its main task, besides hiring experienced personnel, was to expedite operations outside the Gulf of Mexico. Then, beginning in 1995, Global commenced acquiring selected companies operating in various oil fields in widely spread locales. The company's first entry into foreign waters came in 1995, when it undertook two projects in waters off the coast of West Africa, using Cheyenne, a renovated derrick barge moved there from the Gulf of Mexico. The move proved to be very profitable; in fact, in 1997 Cheyenne, still operating off Africa, produced about 25 percent of Global's entire revenue. By that time the company had already acquired other assets that gave it a presence in both Asia and Mexico. It entered the Mexico market in 1996 when it purchased a 49 percent interest in CCC Fabricaciones y Construcciones, S.A. de CV. Although Global thereafter sold its interest in CCC, the deal allowed Global to acquire important equipment from J. Ray McDermott, including the Shawnee and the Comanche, both large derrick/pipelay barges. In the same year, the company also entered the Southeast Asian market when it bought the assets of Divcon International, an Australian company. Also, from Dresser Industries, at a cost of $102 million, it purchased several assets of SubSea International, including all assets in Pacific Rim Asia and the Middle East as well as those in the United States, with the exception of its ROV/engineering division.

Global's growth in the 1990s was close to phenomenal, especially between 1994 and 2000, both in terms of its revenue and its assets. Between 1994 and 1998, its revenue rose from $80.6 million to $379.9 million, a 471 percent increase. During the same period, Global's fleet grew from 15 to 80 vessels. In 1999, the year that Global opened its new headquarters and operational facility in Carlyss, Louisiana, crude prices plummeted, causing a temporary drop in Global's revenues and producing a net loss, but in 2000 prices quickly rose again, to new decade highs. In that year Global agreed to an asset exchange with Oceaneering International, whereby Global swapped some ROVs and support equipment in Asia and Australia for some of Oceaneering's diving and related assets. As the deal with Oceaneering suggests, one of Global's strengths has been its dynamic growth and change strategies. Although the oil industry's volatility can result in unanticipated, bottom-line havoc, over the years Global has demonstrated an uncanny ability to adjust to such conditions and even take advantage of them.

Principal Subsidiaries: Global Industries Offshore LLC; Pelican Transportation; Global Offshore International, Ltd.; Global Offshore Mexico S. do R.L. de C.V.

Principal Competitors: J. Ray McDermott; Stolt Comex Seaway S.A.; Cal Dive International; Torch, Inc.; Horizon Offshore, Inc.

Chronology

• Key Dates:

• 1973: William Doré buys Global Divers and founds Global Industries.
• 1975: Company purchases Pipelines, Inc. and begins providing pipelaying services.
• 1978: Global builds barge ( the GP 35) to extend pipelaying services to intermediate water depths.
• 1987: Global buys Sea-Con Services and adds deepwater construction to its operations.
• 1989: Company begins installing and removing offshore drilling platforms and established Gulf of Mexico deepest dive (1,075 feet) in Jolliet project for Conoco.
• 1990: Acquires pipelaying and derrick vessels from Santa Fe Offshore Construction.
• 1993: Global purchases The Red Adair Company.
• 1995: Acquires ROV Technologies and buys Hercules, giving it heavy load lifting capabilities.
• 1996: Company buys Norman Offshore Pipelines, Inc., Divcon International, and a 49 percent share of CCC Fabricaciones y Construcciones; also acquires Mohawk pipelaying and derrick barge in Indonesia.
• 1997: Global acquires some assets of Sub Sea International from Dresser Industries Inc.
• 1999: Company opens Carlyss facility.