Must-know: JANA Partners discloses activist position in Civeo (Part 3 of 6)
Civeo (CVEO), which was spun-off from Oil States International (OIS) last month, is one of the largest integrated providers of permanent and temporary workforce accommodations, catering, facility management, and logistics services. Its customers are a part of the natural resources industry. Civeo’s customers are located in the world’s most active oil, coal, natural gas, and iron ore producing regions including Canada, Australia, and United States.
The company employs a “develop, own, operate” business model, offering an integrated solution to customers’ workforce accommodation needs. Its solutions span the lifecycle of customer projects from the initial exploration and resource delineation to long-term production.
Civeo’s primary revenue and earnings driver is the lodge and village business that represented over 75% of the consolidated revenues in 2013. It generated approximately 68% of its revenue from its Canadian operations, 25% from its Australian operations, and 7% from its U.S. operations in 2013. The company had over 12,900 rooms in Canada, over 9,000 rooms in Australia, and over 750 rooms in United States.
In Canada, Civeo’s accommodations support workforces in the Canadian oil sands. It also supports a variety of oil and natural gas drilling, mining, and related natural resource applications as well as disaster relief efforts. It’s Canada’s largest integrated provider of accommodation services for people working in remote locations. Civeo provides its services through lodges, open camps, and mobile assets. The company added that the Athabasca oil sands region in northern Alberta generated over three-fourths of its Canadian revenue in 2013. In addition to lodges, it also has seven open camps in Alberta, British Columbia, Saskatchewan, and Manitoba.
The company entered the Australian market with its 2010 purchase of the MAC Services Group. It expanded its room capacity in 2012 and 2013 to meet increasing demand, especially in the Bowen Basin in Queensland and the Gunnedah Basin in New South Wales to support coal production. It also expanded to meet demand in Western Australia to support liquefied natural gas (or LNG) and other energy-related projects. In Australia, Civeo had 9,262 rooms across ten villages at the end of 2013 of which 7,506 rooms service the Bowen Basin—one of the premier metallurgical coal basins in the world.
The U.S. business consists primarily of mobile fleet assets. It’s focused on the Rocky Mountain corridor, the Bakken Shale region, the Eagle Ford Shale, and Permian Basin regions in Texas, and offshore locations in the Gulf of Mexico.
Civeo’s largest customers in 2013 were Canada’s Imperial Oil (or IMO), controlled by ExxonMobil (XOM) and Fluor Canada (or FLR), and BM Alliance Coal Operations, an alliance between BHP Billiton (BHP) and Mitsubishi (MSBHY) in Australia. Imperial Oil and the BHP Mitsubishi Alliance each accounted for more than 10% of accommodations’ revenues for 2013.
Browse this series on Market Realist:
- Part 1 - Why JANA Partners reveals activist position in Civeo
- Part 2 - JANA to push for Civeo’s real estate investment trust conversion
- Part 4 - Why Civeo’s U.S. operations depend on oil and natural gas prices
- Commodity Markets