PHI, Inc - Oil and Gas
PHI, Inc. (The Nasdaq Select Global Market: PHII (voting) PHIIK Oil and Gas segment loss was $ million for the quarter ended The decline in transports for existing bases is primarily due to weather-related issues. Technical statements included in this release, which speak only as of the date made. Main · Videos; Phi oil and gas bases of dating. Tactic phrases from marathon reading (hubworthy us because next the hospice-care chaplain) sustained joy. PHI is attempting to refinance its debt, and the negotiations have Most Used; Market News (by date) · Top News · Wall Street two principal segments, Air Medical, or AM, and oil & gas (O&G). Applying a 50% haircut to the O&G configured aircraft reduces the asset base to roughly $ million.
The placement of drilling rigs in remote or difficult to access places posed significant problems. In Louisiana, seismograph crews often had to traverse rugged terrain in four-wheel drive jeeps and trucks, and marshes and swamps in swamp buggies, sometimes getting bogged down.
It was a slow and fairly dangerous way to get to potential drilling sites. Jack Lee, who was then president of a seismographic company, was appalled by the situation and anxious to find a viable alternative. Thinking that helicopters could provide both a more efficient and safer mode of transport for his crews, Lee approached Robert L.
Suggs and Maurice M. Bayon with his idea. Suggs and Bayon had been operating a radio navigation company called Offshore Navigations Inc. Potential use of PHI's services quickly increased when, in the s, offshore drilling in the Gulf of Mexico started its rapid expansion. The company was already positioned to provide timely transport services to and from drilling rigs and platforms, not just for seismic crews but for other industry offshore workers and equipment.
Byit also began expanding its services on an international scale, starting up operations in oil field locations throughout the contiguous 48 states of the United States. As the nature of its services changed, the company required larger aircraft, and inPHI began using Sirkorsky Ss. In the same year, the company designed and built offshore refueling facilities in the Gulf of Mexico for its growing fleet of rotary-blade aircraft.
Byit had added Sirkorsky Ss to its fleet and, among other things, used them to transport power poles over mountainous terrain in Puerto Rico. Such special use of its helicopters demonstrated PHI's willingness to adapt to the needs of its customers.
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It was also in the s that PHI began taking significant steps towards achieving the industry's premier safety record. At that time there was a paucity of helpful guidelines for helicopter maintenance and operation, and few reliable ground rules for ensuring the safe and efficient use of the aircraft. Inthe company established its own in-house training program, something that thereafter played a major part in its enviable reputation for safety and high quality of service.
Demand for its services was quickly growing. Between andits number of flight hours increased fromtohours. Eventually, customer needs would take the company to 42 countries, where it established associations that in some cases lasted to the end of the century. Starting even earlier, in the s, PHI also established a reputation for public service, conducting the extremely dangerous work of saving lives during disasters, notably the great hurricanes that ravaged the Gulf of Mexico and the Caribbean.
For instance, inwhen Hurricane Carla slammed into the Texas coast with winds of mph, PHI pilots rescued people. During the decade, such heroic efforts won several PHI pilots Winged S Awards for rescue work under hazardous conditions. It was in the mids that PHI also engaged in the first of many unique missions for the U. The company was also undertaking some unique assignments for other agencies and businesses, developing a diverse range of uses for its craft and crews outside petroleum industry needs.
By the end of the s, PHI's fleet of aircraft numbered The growth also required a tracking system that would allow reliable communications between pilots and flight-following facilities throughout their missions. PHI began developing such a system, one that would ultimately become a computerized network allowing effective and dependable communications with airborne pilots from Texas to Florida.
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It was boom time, pure and simple. By the time that it began, PHI already had in place techniques and procedures for ensuring safety and quality service, setting industry standards. By the decade's first year, PHI had logged over 1 million flight hours, the first commercial helicopter company in the world to achieve that milestone. The purchase increased the company's fleet to aircraft bywhen PHI was employing almost 1, people. The company continued to find diverse uses for its fleet of rotary-winged aircraft.
Inin Costa Rica, its pilots fashioned a sling load technique for transporting goods to offshore rigs, including pallets of bananas weighing two tons. PHI growth was steady and very strong through the entire decade. At the time of its 25th anniversary init was maintaining operations at 13 Gulf Coast and five foreign bases. By the end of the decade, the company's fleet reached aircraft, the largest non-military fleet of helicopters in the world.
Only the fleets of the U. Robert Suggs and his staff knew that the company's continued growth would depend on increasing diversification. Though PHI has experienced volatility in its revenue and EPS in recent years, it set its focus on the Gulf's deepwater operations, specifically investing in "heavy" aircraft.
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The next two quarters could be choppy for PHI as it endures the impact of falling crude oil prices and the natural challenges of the winter months. The recent downward pressure on the price of crude oil has many investors befuddled. There's obviously been an impact on the oil companies and their stocks. There's plenty of speculation about the remaining impact and suffering. There's also plenty of discussion about the ripple effect into other industries.
It's no surprise that companies in the oilfield services sector are under pressure.
One of the companies that could be challenged by diminishing business in the offshore sector is PHI Inc. PHI provides helicopter transportation services. Its primary source of revenue is providing helicopter transportation to domestic offshore oil and gas companies in the Gulf Coast region.
The remainder of revenue is derived from providing helicopter transportation to onshore mining, international, and air medical industries. A small portion of revenue is derived by providing maintenance and repairs to helicopter aircraft owned by PHI's customers. Both PHI's revenue and net earnings have shown volatility in recent years. The chart below clearly depicts the lack of a steady upward trend. The reasons for the volatility are displayed on the second chart in correlation with the annual EPS.
The financial crisis hit most stocks including PHI in late and The crisis was followed by the sinking of the Deepwater Horizon rig in the Gulf of Mexico in April From May to Octoberthe U. Department of the Interior imposed a moratorium on deepwater drilling in the Gulf. It was September before drilling returned to pre-accident levels. The slow return was due to the additional approval requirements implemented by the government.
The moratorium had a significant impact on PHI's business from the fourth quarter of through the first half of PHI began repurchasing its 8. Knowing PHI's revenue can fluctuate, understanding the sources of its revenue is highly pertinent. The chart below displays the revenue spread. Clearly, revenue from the Oil and Gas segment is critical. This is further supported in the earnings chart above which displays the impact from the deepwater drilling moratorium.
There are actually several factors impacting revenue in the Oil and Gas segment. The revenue stream in the Oil and Gas segment is structured with contracts providing both a fixed monthly rate and a variable rate for flight time.
The chart below displays the pieces. However, PHI structures these contracts with maximum flexibility. The following descriptions are included in its filings: Inthe largest air medical operator, Air Methods, was taken private for 8.
While the AM segment generates a lot of cash, it only holds about a third of the company's book value. BPand other giant oil company customers. The Second Margin of Safety: However, the deal is actually a bargain. As the leases come due, starting in and completing inthe helicopters can be returned if they are not needed, or the aircraft can be re-leased at current market rates, which are less than half what PHI is paying now.
The Third Margin of Safety: Selling either segment will almost certainly be sufficient by itself to guarantee that the current bonds are good, but what guarantees that the company's CEO will act to protect the value of the bonds?
If that means he needs to sell one or both operating segments, he will. The Fourth Margin of Safety: The Bonds are Senior to the Leases While I consider it extremely unlikely, if the company did enter bankruptcy the leases can all be broken. In fact, that happened in at a competitor, CHC. Stock, Bonds, or Term Loans? Conclusion PHI bonds currently trade at an The most likely outcome is that the refinancing will succeed, and the bonds will be called at par. A sale of even one of the operating segments will be enough to guarantee that the bonds are paid at par.