Monday Interview - Oiling the wheels of success

Published on Sunday 24 August 2008 21:33

WHEN you've overseen a £150 million management buy-out, grown business by a fifth, created thousands of jobs and embarked on a global expansion drive, all in two short years, you probably deserve a break.Fresh from a fortnight's family holiday in France, Bob Keiller is in no mood to take it easy, however.

While many of us would be keen to continue that holiday vibe for a few days, the head of Aberdeen-based energy services outfit PSN – Production Services Network, to give the business it's full title – is already plotting further growth.

Formed in spring 2006 when chief executive Keiller and chief financial officer Duncan Skinner led a management buy-out from US oil services giant Halliburton, PSN now operates in 20 countries across Europe, North America, Africa, Asia and Australasia.

Since the $280m (150m) MBO, which was backed by Bank of Scotland, around 2,500 jobs have been added globally, taking the network of engineers, project managers and support personnel to 8,500. Some 2,000 of those are based in and around PSN's home city.

Modestly, Keiller says the company has established itself as a "credible player in a very competitive marketplace". In reality, the business has faced a string of corporate challenges over the past couple of years, including decoupling itself from its high-profile previous parent.

Even before the word expansion could be uttered, rudiments such as financial systems, legal structures, foreign exchange mechanisms and treasury functions had to be set up to allow the new entity to function. No small task, but accomplished inside of six months.

With the foundations in situ, Keiller and his team have used twin acquisitions – in the Gulf of Mexico and Canada – and joint venture deals in Kazakhstan and the United Arab Emirates to augment strong organic growth.

"We adapt the model to suit what the market needs," notes Keiller. "The acquisition of Tartan Engineering in Calgary was the right way to enter the western Canadian market, given that we had good business in eastern Canada and virtually nothing further west. However, in other areas, forming joint ventures has been the right answer."

Earlier this month, PSN, which booked revenues of $1.2 billion in 2007, secured its first contract in Romania, where the firm will set up a new base. That deal – to support five onshore oil and gas platforms across the country – arose from relationships built up in Kazakhstan. Keiller is confident that the same alliance will help the Scots firm push into yet another new territory, although at this stage he chooses to play his cards close to his chest.

"There are at least another couple of countries that we are likely to establish new contracts in over the next year," he says.

"We are not looking for fantastic geographic spread – we are talking about steady, responsible growth. This is about building a network of local businesses that get the benefit of being tied into our global expertise.

"It has to be sustainable growth. If I was to try and grow the business by 50 per cent a year, for instance, I'm fairly sure something would suffer – staff, systems, processes, accuracy, financial invoicing, whatever."

Comparisons with larger listed peer Wood Group are obvious – a parallel that Keiller seems flattered with. However, he is also keen to stress the differences between the two Aberdonian firms (on the staffing front, Wood Group has a 26,000-strong headcount) and plays down talk of an imminent stock market flotation for PSN.

"Wood Group are a fantastic Scottish success story, but we would differentiate ourselves from them in that we have a less diverse and more focused business model.

"Yes, a listing is an option," he confides. "However, where we are now, we are under no specific external pressure to do anything.

"Our main investor, Bank of Scotland, is extremely supportive of the management team. We have engaged (investment bank] Goldman Sachs to advise strategically on the various options and that piece of work continues."

Privately-owned or publicly-quoted, no energy-facing business can fail to earn a decent crust while a barrel of the black stuff hovers stubbornly above $110. Much to the relief of others, there have been predictions of an oil-price retreat over the coming months as global growth weakens.

However, that potential slide fails to dent PSN's confidence in its financial prospects. "We're not really at the end of the market that depends on capital investment decisions," stresses Keiller.

"We are working mostly with people who have existing assets. There's always pressure to make those assets work more efficiently. When the oil price is low, they want to reduce their costs and when the oil price is high they want to increase capacity. As a result, we tend to be decoupled to some extent from oil price variations."

Keiller's leadership skills and efforts to take PSN in new directions have not gone unnoticed outside of the business.

The former BP engineer was declared Entrepreneur of the Year at the Entrepreneurial Exchange awards ceremony in 2006, scooped Insider Elite KPMG Businessman of the Year 2007 and picked up this year's Ernst & Young Scottish Entrepreneur of the Year accolade.

Instead of basking in the glory, however, Keiller deflects the spotlight on to the company, which was recently elected into the Sunday Times top 100 companies to work for list.

"From a personal point of view, it's great to be recognised by peer groups or the broader industry. But, ultimately, the benefit for me is that it helps to consolidate the reputation of a company that didn't really exist two years ago.

"What we are trying to do now is put the name on the map. It's much easier to hire people if they know that we exist. It's a cliche to use the term 'people business' but that is what we are.

"Recently, I visited a pumping station in the middle of the Cameroonian rain forest and my team there, who are mostly local staff, presented me with a gift of an African robe and a hat and insisted I put them on before we all ate at a barbecue – fantastic people."

Citing an annual employee turnover rate of less than 1 per cent, he adds: "One of the biggest successes we've had is the ability to attract people and hold on to them.We think a lot of that is down to the company culture and the way we treat people – we certainly don't pay any higher than our competitors."

It's a measure of the workaholic nature of the PSN boss that he rattles off industry chair and co-chair roles and membership of the local round table when quizzed about activities beyond the workplace.

Pushed, Keiller admits he has been persuaded to get back on the rugby field for a "golden oldies" tournament in Edinburgh next month.

One suspects he will show no less commitment to the match than the fast-growing business that he now fronts.

BACKGROUND

AFTER graduating in 1986, Keiller began working as an engineer for BP, receiving chartered engineer status in 1990. In 1992, was head-hunted by oil producer Amerada Hess, where he held a variety of management roles.

An offer to join energy services giant Halliburton in 2002 was "irresistible".

Keiller became head of UK operations for the production services division within Halliburton subsidiary Kellogg Brown & Root (KBR).

Keiller led a management team that secured some $400 million (213m) of funding from Bank of Scotland and in May 2006 created PSN through a $280m management buy-out of the KBR production services division.