Industry risk report oil & gas services

Industry risk report oil & gas services

Matthew Brodsky

INDUSTRY RISK REPORT OIL & GAS SERVICES

The oil and gas services industry operates in some unfriendly climates.

Think an oil rig in the middle of a Cat-5 hurricane. Think Iraq. In

onshore and offshore locations at home and abroad, the employees and

equipment of a company in the oil and gas services industry are exposed

to grave danger. The risk manager must be there to pipe into the

company a successful safety program, and prevent a gusher of a crisis.

Company Name Location

Baker Hughes Inc. Houston, Texas

BJ Services Co. Houston, Texas

Cameron International Corp. Houston, Texas

FMC Technologies Inc. Houston, Texas

Halliburton Co. Houston, Texas

National Oilwell Varco Inc. Houston, Texas

Pride International Inc. Houston, Texas

Schlumberger Ltd. New York, N.Y.

Smith International Inc. Houston, Texas

Weatherford International Ltd. Houston, Texas

Company Name CRO

Baker Hughes Inc. Robert Graham Jr., Director

of Risk Management

BJ Services Co. Paul Remson, Director, Risk

Management & Insurance

Cameron International Corp. Anthony Black, Director, Risk

Management

FMC Technologies Inc. Teodoro Alban, Director,

Risk Management

Halliburton Co. James Ferguson, Director,

Risk Management, Assistant

General Counsel

National Oilwell Varco Inc. Ken Jeck, VP, Risk

Management

Pride International Inc. Michael G. O’Reilly, Director,

Risk Management

Schlumberger Ltd. Marianne Macejewski, Risk

Manager for North America

Smith International Inc. Kendell Coffer, Director of

Risk Management

Weatherford International Ltd. Mike Gallien, Director, Risk

Management

Company Name CFO

Baker Hughes Inc. Peter A. Ragauss, SVP

BJ Services Co. Jeffrey E. Smith, VP,

Finance

Cameron International Corp. Franklin Myers, SVP,

Finance

FMC Technologies Inc. William H. Schumann III,

SVP

Halliburton Co. C. Christopher Gaut, EVP

National Oilwell Varco Inc. Clay C. Williams, VP

Pride International Inc. Brian C. Voegele, SVP

Schlumberger Ltd. Jean-Marc Perraud, EVP

Smith International Inc. Margaret K. Dorman, SVP,

Treasurer

Weatherford International Ltd. Lisa W. Rodriguez, SVP

2005 Total

Company Name Revenue

Baker Hughes Inc. $7,185 million

BJ Services Co. $3,243 million

Cameron International Corp. $2,517 million

FMC Technologies Inc. $3,226 million

Halliburton Co. $21,007 million

National Oilwell Varco Inc. $4,644 million

Pride International Inc. $2,033 million

Schlumberger Ltd. $14,309 million

Smith International Inc. $5,579 million

Weatherford International Ltd. $4,333 million

No. of

Company Name Employees

Baker Hughes Inc. 29,100

BJ Services Co. 13,600

Cameron International Corp. 1,220

FMC Technologies Inc. 10,000

Halliburton Co. 106,000

National Oilwell Varco Inc. 26,000

Pride International Inc. 13,700

Schlumberger Ltd. 60,000

Smith International Inc. 1,560

Weatherford International Ltd. 25,100

Primary

Company Name Broker

Baker Hughes Inc. Marsh, Lockton

BJ Services Co. Lockton

Cameron International Corp. Marsh

FMC Technologies Inc. Marsh, Thomas

Sears Inc.

Halliburton Co. Aon; McGriff

Seibels &

Williams;

Lockton; JLT

National Oilwell Varco Inc. Marsh USA

Pride International Inc. McGriff, Seibels &

Williams

Schlumberger Ltd. Withheld

Smith International Inc. Marsh; McGriff,

Seibels &

Williams

Weatherford International Ltd. Aon

Company Name Captives

Baker Hughes Inc. Oxford Alliance Insurance

Co. Ltd. (Bermuda)

BJ Services Co. No

Cameron International Corp. No

FMC Technologies Inc. E. No

Halliburton Co. Petroleum Casualty

Insurance Ltd. (Vermont,

Bermuda) (Both Inactive)

National Oilwell Varco Inc. No

Pride International Inc. Yes (Inactive)

Schlumberger Ltd. Withheld

Smith International Inc. Omega II (Bermuda)

Weatherford International Ltd. No

Company Name: Risk Exposure:

Baker Hughes Inc. Catastrophe related to hurricanes

and other weather events; any other

risks associated with oil and gas

drilling, such as equipment

malfunction and worker injury.

BJ Services Co. General global economic and

business conditions, and those

specific to the oil and natural gas

industry; need to generate

technological advances; operational

hazards present in the oil and

natural gas industry, such as fire,

explosion, blowouts and oil spills;

risks from unexpected litigation;

risks from ongoing investigations;

risks from international operations.

Cameron International Corp. The company’s major exposure is

offshore CAT involving equipment, as

well as international risks as the

company sells products all over the

world. The company also faces

offshore incidents involving

workers, onshore product liability

issues, service work issues and

vehicle accidents involving its

fleet of 1,500 vehicles around the

world.

FMC Technologies Inc. Offshore tools and equipment;

seamless nature of risk transfer

policies; global engineering,

manufacturing and providing services

in energy production and processing,

food machinery and aviation

products; physical assets, in

custody and while transferring

inventory, including offshore

assets; human resources; products.

Halliburton Co. Numerous owned and leased properties

in U.S. and foreign locations; risks

inherent in government contract

work; risks involved in non-U.S.

operations, specific to each of the

countries in which business is

transacted; military action, other

armed conflicts or terrorist

attacks.

National Oilwell Varco Inc. Potential environmental liability,

which the company may not have

adequate insurance for; dependence

upon the volatile oil and gas

industry; risks associated with a

presence in international markets,

including political and economic

instability and currency restric-

tions; federal, state and local laws

and regulations for governing

environmental protection, zoning and

other matters.

Pride International Inc. Hazards inherent in the drilling of

oil and natural gas wells, including

blowouts and well fires, and

possible personal injury, suspending

drilling operations, or serious

damage or destruction to the

equipment involved because of them;

risks of offshore drilling opera-

tions, such as capsizing, grounding,

collision, and loss or damage from

severe weather; continued hostili-

ties in the Middle East and the

occurrence or threat of future

terrorist attacks; risk of inter-

national operations.

Schlumberger Ltd. Dependence of demand for services on

the expenditure levels of customers

in the oil and gas industry; risks

of non-U.S. operations in more than

80 countries; environmental

compliance costs and liabilities;

risk of substantial liability

claims; litigation potential if

another party claims infringement

upon its intellectual-property

rights.

Smith International Inc. Risk associated with manufacturing

and warehousing; risks associated

with a large fleet on the road,

ranging from sedans to 18-wheelers.

Weatherford International Ltd. Adverse weather conditions in

certain regions; political distur-

bances, war or terrorist attacks and

changes in global trade policies;

the risks of war, political dis-

ruption, civil disturbance, and

economic and legal sanctions faced

in doing international business;

currency fluctuations.

Company Name: Risk Strategies:

Baker Hughes Inc. The company takes a conservative

approach and does not place its

people and equipment in harm’s way.

For instance, the company does not

work in Iraq. It also has a strong

health, safety and environmental

program, and an involved crisis

management program.

BJ Services Co. The company implements procedures

to ensure its compliance with

environmental regulations. In

addition, the company maintains

insurance for certain environmental

liabilities, along with coverage

against operating hazards with

deductibles or self-insured reten-

tions and certain coverage

exclusions. Whenever possible, the

company obtains agreements from

customers that limit the company’s

liability.

Cameron International Corp. The company’s No. 1 strategy is to

make the best product possible, and

its No. 2 strategy is to control its

exposures through contractual

provisions with its customers.

Finally, the company also applies

risk transfer through insurance

policies.

FMC Technologies Inc. The company has contractual

provisions with customers. It

possesses a safety consciousness

and a philosophical and practical

commitment to health, safety and

environment, which starts with the

top management. The company also

carries out risk identification,

retention and transfer through

insurance for catastrophic exposures

whenever insurance markets provide

efficient pricing.

Halliburton Co. The company evaluates and addresses

environmental impact from its

operations by assessing and

remediating contaminated properties

to avoid future liabilities and

comply with environmental, legal and

regulatory requirements. Occasio-

nally, the company is involved in

specific environmental litigation

and claims. Its Health, Safety and

Environment group has several

programs to maintain environmental

leadership and to prevent the

occurrence of environmental conta-

mination.

National Oilwell Varco Inc. The company maintains environmental

liability insurance, subject to

coverage limits. The company has

benefits plans covering substan-

tially all of its employees, as well

as defined-contribution benefit

plans that cover most of the U.S.

and Canadian employees.

Pride International Inc. The company has insurance covering

physical damage to drilling rigs and

personal-injury claims by drilling

crews. Its marine policy provides

coverage for damage to rigs and loss

of hire insurance for certain assets

with higher day rates. The policy

has a $10 million per occurrence

deductible. In addition, the company

maintains coverage for cargo,

control of well, auto liability,

nonowned aviation and similar

potential liabilities.

Schlumberger Ltd. The company’s insurance might not

adequately protect it against lia-

bility for some kinds of events,

including those involving pollution,

or against losses that result from

business interruption. In the

future, the company might not be

able to maintain levels of insurance

coverage or policy limits that it

deems adequate.

Smith International Inc. Safety policies, procedures and

training are constantly being

presented to employees, supervisors

and management. Top management fully

endorses the efforts of the health/

safety groups within all of the

business units.

Weatherford International Ltd. The company is self-insured for

general liability, vehicle

liability, group medics and for

workers’ compensation claims for

some employees. The amounts in

excess of the self-insured levels

are fully insured, up to a limit.

The company maintains product

liability insurance, as well as

insurance to cover potential

losses from litigation and

environmental exposures.

COMPILED BY MATTHEW BRODSKY FROM THE FOLLOWING SOURCES: HOOVER’S

RISK AND INSURANCE MANAGEMENT SOCIETY INC. DATABASES; COMPANY

FILINGS AND REPRESENTATIVES.

COPYRIGHT 2006 Axon Group

COPYRIGHT 2006 Gale Group