HI Uplift: Bristow Group’s offshore optimism
Bristow Group is optimistic about the prospects for growth in the offshore energy industry – despite volatile oil prices and supply chain challenges. That was the message from Chris Bradshaw, president and CEO of the helicopter operator at Helicopter Investor’s London 2023 conference. In a wide-ranging presentation, Bradshaw also explained how Bristow is engaging with the latest advanced air mobility (AAM) technologies.
Overall, offshore spending is expected to grow by about 24% this year following 12% growth last year, said Bradshaw. “This follows an eight-year downturn, so it’s a long time in the making. But we do think the next few years will be very positive for offshore activity. We are more optimistic for the outlook for offshore energy than at any time prior to 2014.”
He acknowledged the energy sector was in long-term transition. Also, there are questions – particularly among public market investors – about how near-term recessionary concerns may impact these trends. “We are of the view that the long-term spending will likely be dislocated from near-term volatility in prices,” said Bradshaw.
That was because there had been a prolonged period of under investment, which has constrained supply, as have geo-political factors leading to a focus on energy security. Also, there is concern about high inflation, fuelled in part by high energy prices. “So, we think there will be investment despite near term volatility in spot prices,” said Bradshaw.
One of the implications for the helicopter industry is the tighter supply of helicopters. Bradshaw highlighted the warnings from Air & Sea Analytics a year ago about tight supply in the medium category for AW139s and super medium category. But over the past year the tightening supply of S92s had become increasingly evident.
Looking to S92s to meet incremental demand, Bradshaw said supply chain challenges are continuing to thwart availability. “Within our fleet we have 20 S92 airframes that could go to work but a number of them are AoG [aircraft on ground] awaiting parts,” he said. “Sikorski – and we are working with them – has a recovery plan that would see them get back to normal by the end of this calendar year.”
It is a situation that has taken some – but not all – oil and gas customers by surprise, he adds. “We have a number of occasions where customers have awarded contracts to operators who have made bids without aircraft.”
Another key area of Bristow’s business is government services contracts for missions such as search and rescue (SAR). Bristow holds SAR contracts with a range of governments, which form an important cash flow foundation of the business, representing one quarter of total revenues. “It should be understood that, as a percentage of cash flow, this business has a much higher margin relative to offshore energy,” he said.
Until 18 months ago, Bristow’s general services business comprised two main contracts. One in the US, held for nearly 20 years, concerns the transport of government inspectors around the Gulf of Mexico region. The second was the UK SAR contract. But during the past 18 months Bristow has grown its business. “We have been able to secure the UK SAR Gen2 [second generation contract], which will see us continuing to provide those services to the HM Coastguard and the people of the UK well through the middle of the next decade.”
Bristow has also acquired business in the Falkland Islands to provide personal transport and SAR services to the UK Ministry of Defence. Further contract wins were the SAR contracts for the Netherlands and the Dutch Caribbean.
In addition, there’s an active SAR tender underway for the Irish Coast Guard and other contracts in the pipeline over the next several years.
Turning to AAM, Bradshaw foresaw the technology playing an important role in the future of aviation for several reasons. “They offer a number of efficiency benefits including lower capex [capital expenditure] and opex [operational expenditure]”, said Bristow. “They are quieter and should be more accessible [than conventional aircraft] due to a lower price point. And they can extend aviation services to a segment of the community, particularly in rural areas, that historically has not been well-served by the industry.”
Bradshaw also highlighted AAM aircraft’s ability to lower carbon emissions, representing “a powerful opportunity to accelerate sustainability within our industry”.
But this would be through a process of evolution, not revolution, he added. Bristow was taking “a pragmatic” approach: beginning with cargo and then advancing to regional missions drawing on existing infrastructure to prove the technology can be applied safely and reliably. To achieve this Bristow has invested in a range of partners pioneering differing technologies.
The Helicopter Investor London 2023 conference took place at the Royal Garden Hotel on March 22nd and 23rd.
Bristow is also speaking at our Revolution.Aero Dublin conference next week, which is dedicated to the future of aviation. Click here for the latest agenda.
Above: Chris Bradshaw, president and CEO, Bristow Group at Helicopter Investor London.
Top: A Bristow Group helicopter pictured on a maritime search and rescue mission.
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