A New Partnership Brings New Opportunities

OICS

The team is also in the process of officially rebranding Oil Industry Catering and Services to OICS – the name that industry insiders already regularly use for the well-known company.

OICS was founded by Warick Pope in 1999 to supply catering and related services to onshore drilling rigs. At that point, there were only around a dozen such rigs operating in Australia, and the company dug deeply into what was then an almost untapped market.

After establishing crucial, long lasting relationships within the industry, Mr Pope retired and handed the reins over to Chris Hayes and Roy Eagle in 2005. The new owners took advantage of the resource sector’s rapid growth, quadrupling the company’s revenue over the next six years. “Since its inception, OICS has maintained more than 50 per cent of market share in the catering to drill rig market in Australia,” Mr Hayes reports. “And as that sector is growing we are growing with it and we are also expanding into other remote area catering.”

Mr Hayes says that a number of factors, both domestically and globally, are creating a lucrative environment and new growth opportunities for the niche company. “In Queensland in particular, there is some $70 billion worth of infrastructure being built for LNG, and those plants need to be fed – mainly with coal bed methane, but also traditional oil and gas.” Already, the number of rigs operating in Australia has skyrocketed from a dozen in 1999 to 31 in 2011. And, “as the LNG plants come on line over the next three years, their future contracts offshore – into Asia mainly – are going to require a ramp up of drilling activity.”

As a result, the team expects to see more than 75 rigs operating in Australia within the next two to three years – doubling or perhaps even tripling today’s number. Add to that the emerging potential of previously untapped shale gas, as well as a boom in “the resource sector in general,” and OICS has significant opportunity for expansion.

Mr Hayes and Mr Eagle wanted to take advantage of the industry’s current and projected growth, but realised they would need more funds than the company could provide in order to reach the business’ full potential. “We believed that there is more growth potentially available to the company, but that growth required a quantum leap up in capital,” Mr Hayes explains. “So Roy and I went out and looked for how we could get that capital.” During a laborious 18 month process, the partners were introduced to Blue Sky Equity, a Brisbane based private equity firm, which took a keen interest in the developing company.

Blue Sky Managing Director Tim Wilson says that he liked what he saw from the very beginning. “These guys have got the leading business in what they do. They are the leaders in their space in an industry that is unbelievably well underpinned in the Australian market at the moment.”

In an industry that has recently attracted a bevy of eager start-ups, Mr Wilson says that the team’s well established roots were particularly impressive. “We weren’t backing a fly by night group that suddenly had a great idea to jump on the bandwagon,” he points out. “We were backing guys who had a business that had been running for well over ten years and who had very long standing, trusted relationships with all the major drillers. It was a very established, leading business in the space, so we were confident that we were on the right people.”

Even so, Blue Sky worked closely with OICS for nine months to be completely certain the two teams were a good fit before investing in the company. “We spent a lot of time with them and got to know them,” Mr Wilson says. This process is an important part of Blue Sky’s operating strategy. “You get to know the people to decide if you would work well with them.” OICS passed with flying colours. “It’s all good from our point of view,” Mr Wilson remarks. “The right people, the right sector, the right space.”

The match brings capital to OICS whilst still allowing the company to maintain a reasonable degree of independence. Unlike some private equity firms, Blue Sky Equity chooses to become an equal player with growing businesses, rather than swooping in and taking complete control.

“We inject capital into other people’s businesses to drive growth in that business and then genuinely partner up with the business,” Mr Wilson explains. Blue Sky typically buys into between 30 and 50 per cent of a company, allowing the original owners to maintain a substantial amount of control. “We are quite comfortable sitting in a minority position in the businesses,” Mr Wilson insists. He explains that Blue Sky’s goal is not to take over a business, but to “turbo charge” an already growing company in order to help it reach its full potential.

Blue Sky’s “turbo charge” will enable OICS to maintain its longstanding focus on the drilling industry while simultaneously broadening the scope of the company. “The strategy is to broaden our client base larger than just drilling. [We want to] have the ability to offer our traditional catering services [and also] the ability to offer turnkey solutions that include the camp infrastructure,” Mr Hayes explains.

Until now, OICS has provided the people and food products needed to feed remote workers. With its new influx of capital, however, the team will also be able to provide all of the facilities associated with food service. “A lot of our clients… don’t want to be involved in the design, selection, manufacture and delivery of remote area camps and they are looking for turnkey solutions,” Mr Hayes explains. “Remote area camps – the actual buildings and facilities – require substantial amounts of capital, which is why we have gone out and sought out Blue Sky.” By partnering with Blue Sky, OICS can now offer the turnkey solution that clients are seeking. Already the market leader in remote site catering, the company is sure to achieve even greater success as it dramatically expands its capabilities.

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

June 21, 2018, 6:43 AM AEST