Willbros Group, Inc.

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Willbros Group, Inc.

Plaza 2000 Building
50th Street, 8th Floor Apartado 6307
Panama City 5
Panama
Telephone: (507) 2-13-0947
Fax: (507) 2-63-9294
Web site: http://www.willbros.com

Public Company
Incorporated: 1908 Williams Brothers Corporation
Employees: 4,620
Sales: $583.7 million (2002)
Stock Exchanges: New York
Ticker Symbol: WG
NAIC: 213112 Support Activities for Oil and Gas Field Exploration

With experience going back nearly 90 years, Willbros Group, Inc. is one of the world’s leading pipeline construction specialists, with a specialty in logistically difficult projects, including pipelines crossing the Andes mountain chain, the Wyoming desert, the Amazon river, and work on the Trans-Alaskan pipeline. Originally part of The Williams Companies, Willbros is registered in Panama, although the company has long operated its administrative headquarters from the United States. In 2000, the company moved its administrative headquarters from Tulsa to Houston. Willbros provides turnkey oil field production and pipeline construction services, as well as engineering, construction, and other specialty services in more than 55 countries worldwide. The company’s primary focus is on the United States, West Africa, and the Middle East, although it has also participated in projects in South American and the Australian and Asia Pacific regions. Willbros has been on an expansion drive at the turn of the century, with a series of acquisitions including Rogers & Philips in 2000, MSI Energy Services of Canada in 2001, and Mt. West Fabrication Plants & Services in 2002. Willbros posted sales of nearly $584 million in 2002. The company is led by chairman Larry Bump and vice-chairman, president, and CEO Michael Curran and is listed on the New York Stock Exchange.

Developing a Pipeline Construction Business in the 1920s

Willbros had its start at the turn of the century of the 20th century when two construction workers who were also brothers, Miller and David Williams, founded Williams Brother Corporation in order to finish a sidewalk paving contract in Arkansas that had been abandoned by their employer, the original contractor. The first great oil boom of the time, Oklahoma, led the brothers to begin laying pipelines in 1915. That activity quickly became one of the company’s primary businesses, and in 1919 Williams Brothers moved their headquarters to Tulsa.

Over the next two decades, the company became an important figure in the pipeline and gas field construction industry, highlighted by its award, in 1942, as the principal contractor for two War Emergency Pipelines. The “Big Inch” and “Little Big Inch” connected the East Texas oil fields to ports in New Jersey. In this way, the U.S. government was able to thwart the presence of German submarines and deliver crucial fuel oil to the northeast. The first leg of the Big Inch pipeline was completed by 1943, and by 1944 oil arrived at its final destination in Linden, New Jersey.

Williams by then had started it first international contract—building a pipeline in Venezuela. Joining the company for that project was David Williams, Jr. and his cousin, John Williams, who interrupted his education at Yale University for the project. Another member of the Williams family, Charles Williams, son of the older brother of David and Miller Williams, joined the pipeline business during this time.

The company continued to win international projects, particularly in South America, in addition to its operations in the United States, including a contract to build a 370-mile pipeline in Bolivia in 1947. Two years later, Miller and David Williams retired, selling the business to David, Jr. and John and Charles Williams, as well as a number of the company’s executives.

The discovery of vast oil reserves in the Middle East presented a natural market extension for the company in the 1950s. In 1951, Williams joined in on the construction of the Trans-Arabian Pipeline, building the 400-mile leg connecting Jordan, Syria, and Lebanon. In the mid-1950s, Williams added the Persian Gulf to its sphere of operations, completing the southern portion of the Trans-Iranian pipeline in 1957. The following year, the company added another large-scale project in Iran, participating in the Kharg Island oil export terminal.

Meanwhile, Williams had continued to develop its pipeline business in the United States, notably with the contract to build a 625-mile pipeline system in Alaska, the first pipeline constructed in that state. In addition to the pipeline itself, Williams oversaw construction of the pipeline’s support operations, including tank farms, pump stations, and docks.

Williams went public in 1957. In 1960, the company expanded into gas pipelines, building a 2,175-mile pipeline, the Mid-America Pipeline, as well as its support operations, including delivery terminals, storage facilities, and pump stations. At the same time, Williams continued to look abroad for work, and in 1962 entered Western Africa with a contract to build the 170-mile TransNiger Pipeline.

Splitting Off in the 1970s

A major moment in Williams’ history came in the mid-1960s when the company constructed a 390-mile pipeline connecting Santa Cruz to Sica Sica in Bolivia—a project that reached an elevation of nearly 14,800 feet above sea-level, making it the world’s high pipeline and helping establish the company’s reputation for its ability to complete ‘’logistically difficult” projects under the most extreme conditions. The Bolivian project was completed in 1965, in time for the company to begin a new project, the 175-mile Fahud-Muscat crude oil line, which brought the company into Oman for the first time.

A significant moment in Williams history came in 1966, when the company acquired the Great Lakes Pipe Company. Subsequently renamed the Williams Brothers Pipe Line Company, the purchase extended the company from the construction of pipelines to their ownership. It also marked a step in the company’s transition to a stronger focus on the natural gas market.

In 1967, Williams began another high-profile, logistically difficult project, the construction of a crude-oil pipeline cross the Andes mountains in Colombia. This undertaking represented the first of five Andes mountain projects for the company. In 1970, Williams began work on a new Andes mountain project, this time with the construction of the Trans-Ecuadorian Pipeline. Completed in 1972, that project led the way to two more challenging projects, the launch of the Trans-Alaskan Pipeline in 1974 and, in a joint-venture, of a pipeline and pump station project in the western Amazon river basin in Peru.

In the late 1960s, the company had begun making a series of acquisitions designed to diversify its range of businesses. By the mid-1970s, the company, which changed its name to The Williams Companies in 1972, encompassed operations including propane sales, fertilizers, chemicals, and metals, as well as pipeline ownership. The company had also stepped up its interest in natural gas, and in 1974 set up its own gas exploration and production wing.

Williams’ expansion led it to lose interest in its historic core pipeline construction business, and in 1975 it sold off that operation in a management buyout, which formed a new company, registered in Panama, called Willbros Group. In 1979, however, Willbros, in a move to retire its debt, sold 60 percent of its shares to Heerema Holding Construction Inc. Originally formed in Venezuela in 1948, Heerema had become a specialist in offshore petroleum platform construction in the mid-1950s. Heerema acquired completed control of Willbros in 1986.

Throughout the 1980s, Willbros racked up a string of projects, including a 505-mile carbon dioxide pipeline in the American Southwest, the All American Pipeline System. Completed in 1983, the pipeline stretched over 1,200 miles and included 23 pump stations.

Expanding Focus for the New Century

In the mid-1980s, Willbros once again performed work for the U.S. government when it developed and built a new “rapid deployment fuel pipeline distribution and storage system.” Started in 1984, that system was delivered to the U.S. Army and deployed during the first Persian Gulf War in 1990. It was used again during the 1995 conflict in Somalia.

That project highlighted Willbros’ expansion beyond its focus on construction with a heightened emphasis on its engineering expertise during the 1980s. This development enabled the company to win a contract providing project management, engineering, and procurement and support services for the modification and expansion of the Great Lakes Gas Transmission System, starting in 1988. The following year, Willbros began supplying engineering and other support services for the Kern River Gas Transmission System, which crossed from Wyoming to California.

Heerema decided to exit the pipeline construction and engineering market in 1992, and sold Willbros in a new management buyout led by Larry Bump and other members of the company’s management, backed by investors including Dillon, Reed & Co. That year, the company began a new contract for the reconstruction of the oil field gathering systems in Kuwait. The company also began working in Russia, setting up a subsidiary there, as it started work as part of a consortium building a pipeline connecting the Kazakstán oil fields to the Black Sea.

Company Perspectives:

Our mission is to provide—anytime, anywhere—safe, efficient, and extraordinarily competent services to our worldwide clients in a manner which justifies employee pride and customer confidence.

Willbros went public in 1996, listing its shares on the New York Stock Exchange. The following year the company made a secondary offering. By then, Willbros had begun to target a number of new markets, particularly the booming Asian countries, including Pakistan in 1995 and Indonesia in 1996. The collapse of the Asian economies in the late 1990s, however, limited Willbros’ growth in the region.

The company found stronger markets in the United States, where it constructed a 45-mile gas pipeline system connecting Texas and Mexico in 1998. The following year, the company turned to Australia, forming a joint-venture to build a pipeline with a total length of 492 miles. Nonetheless, the United States, with its booming economy, became the company’s strategic target through the end of the decade. Whereas Asia and West Africa had been the source for much of the company’s sales in the first half of the decade, by the beginning of the next, the North American market accounted for more than half of total sales, which climbed from $252 million in 1997 to more than $390 million in 2001. The company’s refocus in that year enabled it to pull away from three years of losses, with a profit of more than $19 million.

Acquisitions formed a significant part of Willbros’ growth at the turn of the century. In 2000, the company paid $7 million to acquire Houston-based pipeline construction company Rogers & Philips, which itself had been formed in 1992. (Also in 2000, the company moved its administrative headquarters from Tulsa to Houston.) Willbros’ acquisition drive continued into 2001 with the purchase of MSI Energy Services Inc., based in Alberta, Canada. Formed in 1988, MSI gave Willbros its first base of operations in that country.

Larry Bump, who had served as company CEO since 1979, retired to the chairman’s position in 2001, naming Michael Curran as the company’s new CEO, president, and vice-chairman. Curran maintained the company’s growth through acquisition, leading the September 2002 purchase of the Mt. West Group of companies, which, with offices in Oregon, Colorado, and Wyoming, not only added some $60 million to Willbros’ annual sales but also enabled it to gain coast-to-coast coverage of the U.S. market. In addition, the acquisition of Mt. West gave Willbros the potential of diversifying into the larger energy sector.

By the end of 2002, Willbros sales had soared to nearly $584 million. In 2003, the company prepared a return to the Far East, specifically an entry into the highly promising Chinese market. In May of that year, the company formed a partnership agreement with local groups Sinopec Jianghan Petroleume Group and Joanghan Oilfield Construction and Engineering Company. After nearly 90 years in business, Willbros had successfully repositioned itself as a full-service engineering and construction group focused on the worldwide energy sector.

Principal Subsidiaries

Constructora CAMSA, C.A.; MSI Energy Services Inc.; Mt. West Group; Nigeria and West Africa Marine; Rogers & Phillips, Inc.; The Oman Construction Company Ltd; Willbros (Nigeria) Limited; Willbros (Overseas) Limited; Willbros Engineers, Inc.; Willbros International, Inc.; Willbros Offshore (Nigeria) Limited; Willbros USA, Inc.

Principal Competitors

Halliburton Inc.; Schlumberger Ltd.; Bechtel Inc.; BHP Billiton Ltd.; Technip Italy SpA; Chevron Exploration and Production Services Co.

Key Dates:

1908:: David and Miller Williams found Williams Brothers Corporation in Arkansas.
1915:: The company begins pipeline construction operations in Oklahoma.
1919:: Williams moves its headquarters to Tulsa as it begins to specialize in pipeline construction.
1939:: The company takes on its first international venture, a pipeline project in Venezuela.
1942:: Willbros is named principal contractor of Big Inch and Little Big Inch War Emergency Pipeline projects.
1949:: David, Jr., Charles, and John Williams buy the company from David and Miller Williams.
1957:: Williams goes public.
1966:: The Great Lakes Pipe Line company is acquired in a move to transition to the natural gas market.
1972:: The company changes its name to The Williams Companies.
1975:: Williams exits the pipeline construction market and spins off those operations in Willbros management buyout.
1986:: Hereema Holding acquires full control of Willbros.
1992:: Willbros is spun off from Hereema in a new management buyout led by CEO Larry Bump.
1996:: Willbros goes public on the New York Stock Exchange.
2000:: The company refocuses on the North American market.
2003:: The company plans to enter the Chinese market.