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Africa Outlook

Weatherford

WEATHERFORD

Q&A: Weatherford

Oilfield services company Weatherford operates in more than 100 countries and employs more than 50,000 people worldwide. With a product and service portfolio that spans the life cycle of a well, it is positioned to meet the ever-evolving needs of the oil and gas industry.

Writer Ian Armitage
Project manager Debbie Clark

Weatherford is an oilfield services giant that needs little introduction and its international businesses are likely to be key growth drivers in the future, with expansion in Sub-Sahara Africa in particular. Africa Outlook recently talked with Weatherford's Business Development Manager: Wireline Minerals, Blake Smith. It is his job to regularly review the African market place and we asked him a series of questions centred on business performance, market trends and growth potential…

Thanks for taking the time to talk with us. Could you start by giving me a brief introduction to the company in your own words?
At its root, slimline logging entails the acquisition and interpretation of data from small-diameter boreholes
to evaluate asset potential and inform critical operational decisions—whether the target resource is coal, minerals, or unconventional hydrocarbons. The company's slimline logging capabilities range from standard log acquisition and interpretation to specialised services such as borehole cross-correlation, geotechnical mine planning, ore mapping and stratigraphic well logging.

Weatherford, a Swiss-based, multinational oilfield service company, is a premier provider of slimline logging services to the mining sector around the globe with a major focus throughout Sub-Saharan Africa. The regional entity of this global service company is Weatherford UK Ltd (SA Branch), with branches in various other countries across our region Sub- Saharan Africa.

What would you say is your USP?
Weatherford's Slimline services draws on more than 40 years of dedicated minerals logging development and experience – as part of an oil and gas wireline service provider we are able to advance our minerals equipment development based on the significant advancements available through the very technically demanding oil and gas regime. We are the only minerals logging company able to draw on the extensive experience and resources of a major international wireline service provider. This allows us to meet and cater for all of our client's needs with a measurable and sustainable level of quality.

Tell me more about your current position and your remit? What are your aims and objectives?
My job title is business development manager, but in the local Slimline business my remit is wider ranging than that job title might suggest. It is my job to regularly review the African market place and to adjust local strategy to best suit the changing needs of that market. It is also important for me to contribute at a global level to the development of our global Slimline strategy. At a micro level I must ensure that we are in regular contact with our established clients to ensure service delivery satisfaction, and that I identify new opportunities for adding value in the mining and the civil engineering industries. My aim is to ensure that our business is providing the quality service that our clients need. I see myself as the feedback enabler between clients and operations, allowing us to continually improve our performance.

Are you excited by the challenge?
This is one of the most exciting and challenging roles I have ever had. The face of mining in Africa is changing every day. It offers a huge variety of client challenges which require tailored responses. There is diversity in geographical market segment as well as technical market requirements.

The people I work with (internally and externally) are also one of the best aspects of being in this position. I'm not just saying that because it is politically the right thing to say, but because it is absolutely true. The opportunity to spend time with people who originate from such diverse backgrounds and outlooks is a fantastic privilege.

So, looking back on 2012... What's happened?
The expansion of the mining industry leading up to 2012 provided challenges to our business at a global level to meet the rapidly increasing demands of our clients. More recently, as the near-term outlook for mining has changed, our main challenge has been to continue to provide safe operations and to maintain our desired service quality, while keeping tight control on our costs. We have always had very good cost control, and this has allowed us to ensure we are providing value to our clients in a very cost conscious market place. In Mozambique we have been able to work closely with the clients there to develop the extensive coal resources through very intense exploration programmes in recent years. These have been large scale programmes. On a smaller scale, but equally importantly, we have been able to assist a client in the Republic of Congo by helping them define their ore-body and geotechnical parameters of their prospect beyond their expectations. Sometimes the relatively small jobs can be as satisfying to us as the large programmes, especially when what we provide is highly valued by the client. The equation for success in our business is relatively simple.

We focus on safety and we focus on quality. To this end we are always engaged in training our workforce to ensure that they are always engaged in and focused on improving our safety culture and that they continue to provide the highest level of service possible. We develop our equipment and our systems, but the development of our people is what is most important. We can always improve, and we strive to do so to become more efficient and ultimately more responsive to our clients' needs.
How would you sum up the current state of the industry then?
The global market is going through some challenging times. Growth in demand for mined products is driven by economic growth, and exploration and development are driven by demand for the underlying commodities. Our clients are very cost conscious at present, but they are also aware that the exploration work must continue today so they can be prepared for their future production needs. In many developing nations mining represents a significant opportunity to improve the fortunes of the people. Raw commodities are a requirement for economic growth in the modern world, and as such demand may slow, but itm will always be there. International mining companies are targeting their development expenditure more thoughtfully – they are moving funds for exploration from the countries where it has become too expensive to operate, and are targeting those countries where they can see political stability as well as the opportunity to maintain control of costs. For example many African countries are likely to benefit from the shift of development funds away from Australia, where operations have become unsustainably expensive to develop and to maintain. The key is a stable political attitude to the mining sector – incredibly the Australian government has not done this, and this has contributed to the departure of investment in mining there. Their loss can be Africa's gain. As nations industrialise and populations improve their standards of living, mining is taking a more central role on the world stage. Today mining is front page news, more often than not, across the globe. This greater visibility implies greater responsibility from the mining companies.

What's the aim for 2013/14 and beyond?
2013 is a year of consolidation for us – the slow down in activity from our clients this year has provided us with a rare opportunity to increase the time dedicated to operational excellence and to improve our safety culture to a new level. We are striving to improve our systems and service quality by development of our people – this is time consuming and requires the extra capacity in the system that we have this year. That will position us to be best prepared when in the coming years the demand for services increases to previous levels. Our oilfield arm has had some very exciting developments in recent years and applying these new technologies to a minerals environment in a cost effective way will be one of our areas of focus. We have the global capacity to expand our business to meet the often rapid changes of our market. We recognise that our people are the key to our future growth, and our strategy is to maintain and develop our key staff to be the future mentors and trainers within an expanding business. Our diversity in geography and mineral segment means that we are able to maintain the levels of profit which our shareholders expect. Weatherford's global revenue and profit margins are a matter of public record, and importantly for our shareholders, the share price has been steadily increasing over the year and I think that is reflection of our sustainable business practices.

Turning our attentions onto Africa again, many countries on the continent are enjoying growth at a time when the rest of the world is in recession. Are you benefiting from that?
We have benefitted over this "recession" time and have managed to grow our business in a very volatile and competitive market place. I think it is important to understand that African and Asian countries are industrialising quite fast, and this has affected the supply and demand economics in a very positive way in Africa where demand has been and probably will continue to grow at a much quicker rate than supply. The relatively low underlying development and production costs for our clients in Africa will continue to encourage the international investment in this region. Since we are willing and able to invest in our own business to take advantage of these demand spikes we naturally grow relative to these economic factors. I certainly believe that we are well placed to take advantage of the opportunities in Africa, especially when we look at the investment we have made in this region in our people and equipment. Our global support network and ability to respond rapidly to a changing market also puts us in a position to make the most of all opportunities in Africa.

What is the secret to the company's success?
We strive to be flexible in the way we approach the problems faced by our clients. We work with them to find the answers that they need and to get the most from their investment in exploration and development. I think Ernest Hemingway said it best -- "I never knew of a morning in Africa when I woke up that I was not happy."

To learn more about Weatherford visit www.weatherford.com.