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
