Company overview 2011 - SBM Offshore

As I write, I have been with SBM
Offshore for ten months, initially
as Chief Operating Officer and,
since January 1st 2012, as Chief
Executive. One hundred days into
the role, this is an apt moment to
step back from the detail of the
annual report, and to share with
you my assessment of this business
and the strategic path we
are setting for its future.
To lead SBM Offshore is one of the most exciting jobs in the industry.
Through the skill of its engineers, and the Group’s capacity to
maintain a constant technological edge, SBM has become synonymous
with one of the energy industry’s most vital asset classes;
the floating production storage and off-loading (FPSO) vessel. The
global trend in oil and, to some degree, gas production is inexorably
offshore and into ever more demanding ocean regions. FPSOs,
uniquely, facilitate this shift. SBM has an exceptional opportunity
to capitalise on this industry trend.
This then is our through-cycle strategy; to secure the business
around our primacy in FPSOs. But in the next few months we must
still resolve some profound challenges. To do so we must succeed
in working as one team under a single SBM identity, in an aligned
organisation with strong focus on corporate discipline. The executional
difficulties of the legacy Yme project, against which we have
had to take several significant provisions, aptly illustrate the vital
need for change. Signally, Yme is not an FPSO – a reminder of
the hazards of poor diversification and divided focus. To my mind
such projects equally underline the imperative for SBM in future:
to focus exclusively on our core competence, the FPSO.
The strategic plan that has now been established for the Group
can be summarised in three common sense-steps: to work as
one; to perform; to shape our own future. It’s worth spelling out
the vital need for each step.
SBM Offshore has grown tremendously in recent years, but an
unintended side-effect has been the proliferation of ways of working
as different teams around the Group have driven the business
forward. But there is now an urgent need for organisational consistency
and discipline. In particular, a severe challenge is posed
by the scale and nature of risks that have emerged as the Group
has helped lead our industry ever further offshore.
The accelerating complexity of facilities; the scale of investment;
the doubling and tripling of the average FPSO contract life; the
use of FPSOs as full life-of-field development systems; all have
combined to demand a Group-wide re-appraisal of organisational
structure and risk. All the changes required - including the
9
readiness to accept a single set of systems across the Group - are
what we mean by “working as one”.
Secondly we have set the requirement “to perform”. This is not in
any way to disparage our track record. SBM has an outstanding
and admirably long record of consistent delivery for clients in its
core FPSO business. I am stressing that we dare not risk losing
that reputation; rather, we must enhance it. The Group must never
be let down by rogue projects, and the Company as a whole must
perform financially, consistently.
Finally, we must “shape our own future”. Complacency is one of the
dangers of industry trends being in our favour. Historically, SBM’s
competitive advantages have been the quality of our engineers’
skills and our leadership in key technologies. So we must continue
to recruit the best people and invest in their training. Additionally,
we must identify industry-defining technologies and devote the
necessary financial and human resource, through selected R&D,
to maintain our edge over competitors.
Let me sum up what I expect of SBM Offshore in the year ahead.
The senior team needs to perform, throughout our portfolio of
projects, in line with our commitments. Critically, this demands
resolution of the Yme challenge and the refocus of the business,
under the direction of a single common management structure with
absolute clarity of responsibility, on a product and service range
related exclusively to our core competence of FPSOs.
Within a year, I expect everyone in the Company to understand
and own these changes, as the keys to success. I expect us to be
disciplined and for our performance to be assessed by reference to
each individual’s delivery– by their outputs, not their inputs. Then,
with a new organisation under renewed branding, we will be able
to take advantage of the extraordinary future that is developing in
offshore oil and gas.
Bruno Chabas