1. ANNUAL REPORT
2000
W h e r e Tr a d i t i o n a n d Te c h n o l o g y C o m e To g e t h e r
2. COOPER CAMERON
Cooper Cameron is a leading international manufacturer of oil
Where Tradition and Technology
Come Together
and gas pressure control equipment, including valves, wellheads, controls,
chokes, blowout preventers and assembled systems for oil and gas
drilling, production and transmission used in onshore, offshore and
subsea applications. Cooper Cameron is also a leading manufacturer of
centrifugal air compressors, integral gas compressors and turbochargers.
Additional information about the Company is available on Cooper Cameron’s home page
at www.coopercameron.com.
3. 1
FINANCIAL HIGHLIGHTS
($ thousands except per share, number of shares and employees)
Years ended December 31: 2000 1999 1998
Revenues1 $ 1,386,709 $ 1,475,061 $ 1,893,311
Gross margin 411,912 398,785 552,589
Earnings before interest, taxes,
depreciation and amortization (EBITDA)2 214,531 193,051 322,879
EBITDA (as a percent of revenues) 15.5% 13.1% 17.1%
Net income 27,660 43,002 136,156
Net income2 84,224 54,688 151,682
Earnings per share
Basic 0.52 0.81 2.58
Diluted 0.50 0.78 2.48
Diluted2 1.53 1.00 2.76
Shares utilized in calculation of earnings per share
Basic 52,800,000 53,328,000 52,857,000
Diluted 55,013,000 54,848,000 54,902,000
Capital expenditures 66,599 64,909 115,469
Return on average common equity2 10.6% 7.0% 21.7%
As of December 31:
Total assets $ 1,493,873 $ 1,470,719 $ 1,823,603
Total debt 192,272 210,332 413,962
Total debt-to-capitalization 18.6% 22.8% 34.7%
Stockholders’ equity 842,279 714,078 780,285
Shares outstanding 54,011,929 50,567,959 53,259,620
Net book value per share 15.59 14.12 14.65
Number of employees 7,300 7,200 9,300
Revised to reclassify shipping and handling costs from
1
revenues to cost of sales.
Calculated excluding nonrecurring/unusual charges.
2
TABLE OF CONTENTS
Company Profile . . . . . . . . . . . . . . . . . . . . . . . 2
Letter to Stockholders . . . . . . . . . . . . . . . . . . . 3
Cameron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cooper Cameron Valves . . . . . . . . . . . . . . . . . .14
Cooper Energy Services . . . . . . . . . . . . . . . . . .18
Cooper Turbocompressor . . . . . . . . . . . . . . . . .22
Management’s Discussion and Analysis . . . . . .25
Report of Independent Auditors . . . . . . . . . . . .33
Consolidated Financial Statements . . . . . . . . . .34
Notes to Consolidated Financial Statements . . .38
Selected Financial Data . . . . . . . . . . . . . . . . . .55
Stockholder Information . . . . . . . . . . . . . . . . . .56
4. 2
COMPANY PROFILE
CUSTOMERS
PRODUCTS
Provides pressure control systems, Oil and gas majors,
Surface and subsea ®
equipment and services for oil independent producers,
production systems,
and gas drilling and production engineering and
blowout preventers,
in onshore, offshore and construction companies,
drilling and production ® ®
subsea applications. drilling contractors,
control systems, gate
rental companies and
valves, actuators,
geothermal energy ®
chokes, wellheads, ®
producers.
drilling and production
riser and aftermarket
parts and services.
PRODUCTS CUSTOMERS
®
Oil and gas majors,
Provides products and services to Gate valves, ball
independent producers,
the gas and liquids pipelines, oil valves, butterfly valves,
engineering and
and gas production and industrial Orbit valves, rotary
®
construction companies,
process markets. process valves, block
pipeline operators,
& bleed valves, plug
drilling contractors
valves, actuators,
® ®
and major chemical,
chokes, and aftermarket
petrochemical and
parts and services.
refining companies.
®
PRODUCTS CUSTOMERS
Integral engine-
Provides products and services to Oil and gas majors,
compressors,
the oil and gas production, gas independent producers,
reciprocating
transmission and process markets. gas transmission
compressors, companies, equipment
turbochargers, leasing companies and
control systems independent power
and aftermarket producers.
parts and services.
PRODUCTS CUSTOMERS
Integrally geared Petrochemical and
Manufactures and services
centrifugal compressors, refining companies,
centrifugal air compression
compressor systems durable goods
equipment for manufacturing ®
and controls. Complete manufacturers, basic
and process applications.
aftermarket services resource, utility, air
including spare parts, separation and chemical
technical services, process companies.
repairs, overhauls and Specific focus on
compressor upgrade automotive, glass,
engineering. textile, electronics, food,
container, pharmaceutical
and other companies
that require oil-free
compressed air.
5. 3
TO THE STOCKHOLDERS OF COOPER CAMERON
We began 2000 with hopes that 1999’s resurgence in oil and gas prices would be sustained
at levels that would support a much-anticipated recovery in spending by our customers.
Midway through, we were encouraged by the demand/supply scenario that appeared to
support a long-term stabilization of prices. By year-end, we were surprised that activity had
not accelerated more strongly and that our backlog remained relatively constant, rather than
increasing. While our order book did not grow as briskly as we originally expected and would
have liked, Cooper Cameron’s profits showed steady improvement during the year.
Financial performance
improves over prior year
Recovery under way,
Revenues totaled $1.39 billion for 2000, down
but at modest pace
almost six percent from 1999’s $1.48 billion. 1999
results, however, included $93 million in rev- Oil and gas prices rose during 2000 to the high-
enues from the rotating compressor business, est levels seen in the past decade. Oil prices spent
which we sold at the end of last year’s third quarter. most of the second half of the year above $30 per
Despite the lower revenue base, earnings before barrel before returning to a more moderate level
interest, taxes, depreciation and amortization in the high 20s by year-end. Natural gas prices
(EBITDA) were up by approximately 11 percent, rose steadily throughout the year, and with the
to $215 million compared with last year’s $193 approaching winter months, broke the $10 per
million. Earnings per share, excluding nonrecur- mcf barrier on the futures market. Oil and gas
ring items, increased from $1.00 to $1.53, up 53 markets have clearly uncoupled, with oil remain-
percent from 1999. The percentage increase in ing a global commodity and North American
EPS exceeded that of EBITDA, primarily because natural gas demand being influenced more and
of lower interest expense as a result of our having more by growing electric power markets fueled by
reduced debt with the proceeds from the sale of natural gas.
the rotating business, as well as the absence of Many expected higher prices to be the catalyst
depreciation and amortization associated with for a rapid recovery in drilling and development
that business. activity by energy producers worldwide.
Although that has been true among certain
customers focusing on natural gas in North
6. 4
America, higher oil prices have not generated
similar increases in spending in most interna-
tional markets. Mergers among major producers,
uncertainty about future hydrocarbon prices,
cautious economic assumptions on large develop-
needs and expectations become the focus of the
ment projects and a measured approach to doing
manufacturing or service effort; data are accumu-
business in new international arenas like West
lated to measure performance versus standards,
Africa appeared to instill an extreme sense
and opportunities are identified for improving
of conservatism in many of our customers
$1,893
$1,817
that performance; and resources are allocated to
during the year.
$1,475
$1,395
$1,387
aggressively address the opportunities.
We like the feel of this energy market. We
The most important resources for the program
believe that the current pace of activity is con-
are the people who execute the plan. Cooper
ducive to a sustained upcycle, and will bring
Cameron began training key personnel in Six
about a relatively longer-term recovery. Spending
Sigma practices in late 2000, and there are already
by our primary customers is forecast to increase
more than 50 projects under way in the various
by approximately 20 percent during 2001; we
96 97 98 99 00
Revenues divisions.
expect to capture a reasonable share of that incre-
($ millions)
We expect these projects to generate meaning-
mental business.
ful contributions to earnings over the next several
Six Sigma program begins years. This will be an ongoing business practice,
not a short-term program.
In September 2000, Cooper Cameron initiated
This effort, combined with Cooper Cameron’s
its Six Sigma program, with a goal of improving
long-time emphasis on quality programs and
manufacturing and service results across each of
“best practices” initiatives, is expected to give rise
the Company’s divisions. Six Sigma has been
to significant improvements in business processes,
successfully implemented in numerous world-
$323
$294
customer satisfaction and overall profitability.
class companies, and the standards and practices
are well-suited to Cooper Cameron’s quality and
$215
$193
Restructuring expected to
$183
customer service goals.
be completed by mid-year 2001
While Six Sigma’s literal definition offers a
We recorded significant nonrecurring charges
statistical measure of variation from the norm,
during 2000 related to ongoing restructuring
the program uses selected tools for evaluating,
96 97 98 99 00
activity in our businesses, particularly in the
measuring and, most importantly, improving
EBITDA Cooper Energy Services (CES) operations. We
processes within an organization. Customer
($ millions)
recognized more than $77 million in nonrecur-
ring charges during the year, including nearly $37
million in non-cash write-offs of assets. About 87
percent of the charges were related to CES.
Included were remaining costs from the 1999
decision to close the Grove City, Pennsylvania
7. 5
Taking advantage of a
healthy balance sheet
At year-end, our balance sheet was as strong as
it’s ever been. Total debt was down to $192 mil-
lion, and our debt-to-capitalization ratio was 18.6
facility; the transfer of equipment and operations
percent. We will continue to seek out acquisition
from Mount Vernon, Ohio to other locations,
opportunities, subject to our usual standards of
including our new facility in Waller, Texas, west of
strategically fitting within the current framework
Houston; and our recent decision to exit the
of our businesses. Such opportunities are difficult
17.1%
16.2%
15.5%
Superior gas engine line and close CES’
to find in a market where the prospects appear so
13.1%
13.1%
Springfield, Ohio plant. That process will continue
encouraging for potential sellers.
into the first half of 2001 and require additional
We may also choose to again repurchase our
charges along the way. Closing these old and
own common shares. We bought approximately
expensive facilities clearly benefits us financially,
3.5 million shares at the end of 1999, at an aver-
and our product and market positions will be
age cost of about $28 per share. One of our stated
96 97 98 99 00
strengthened for the future. Other charges during
objectives is to control our share count through
EBITDA
(as a percent of revenues)
2000 were related to facility closure, restructuring
repurchases, and we would certainly look on any
and workforce reductions in a variety of Cameron
decline in the stock price as an opportunity to
locations, and there were some modest costs associ-
reenter that market.
ated with Cooper Cameron Valves (CCV) and
Cooper Turbocompressor (CTC). Encouraging performances
We separate these charges from our operating
We spend a lot of time dealing with challenges
results because they do not represent an ongoing
across our businesses, and we sometimes forget to
component of doing business and they stem from
acknowledge the successes. Examples of these can
actions separate from day-to-day operations.
$115
be found throughout our operations.
Still, we cringe every time we characterize these
Cameron remains the primary driver of our
items as nonrecurring or unusual, simply because
operating and financial performance, and contin-
$72
$67
$65
they seem to have become a too-regular part of
ues to raise the bar for performance as an indus-
our financial reporting. One of our goals during
$37
try leader. Cameron’s worldwide aftermarket
the first half of 2001 is to record the last of such
initiative, CAMSERVTM, has reinforced Cameron’s
charges. We can’t guarantee there will be no more
role as an industry leader in parts and service, and
96 97 98 99 00
similar charges, but we’ll do our best to wrap up
boosted the aftermarket business to more than
Capital Expenditures
the restructuring process as quickly as possible.
($ millions)
one-third of Cameron’s revenues. We remain a
Still, when we see substantial opportunities to
improve our business, we won’t hesitate to take
decisive action.
8. 6
leading supplier of subsea trees and associated
components for deepwater well completions, and
our blowout preventers and related drilling con-
trols systems are market leaders as well. And in
the surface business—which includes production
equipment installed both on land and on offshore
platforms—we continue to hold the top market
share position worldwide.
equipment and services was not as robust as we
One of the greatest challenges at CES is dealing
$1,894
$1,843
expected, our earnings per share increased by
with demand for Ajax integral engine-compressor
$1,497
$1,406
more than 50 percent during 2000, and we expect
units. North American gas activity has stimulated
$1,303
our financial performance to improve again dur-
customer interest in these gas compression packages.
ing 2001. Meanwhile, the pace of activity in the
Cooper Turbocompressor (CTC) began an
energy business, coupled with OPEC’s apparent
active aftermarket development effort last year,
discipline and a healthy North American gas market,
leveraging off its significant base of installed
is fueling what should be an extended upcycle.
equipment, and customer response has been
96 97 98 99 00
Orders extremely encouraging. The combination of
($ millions)
In closing…
maintenance agreements, OEM parts and
During Cooper Cameron’s first five years as a
enhanced products and services are generating
public company, we experienced a full cycle in the
revenues in an area previously untapped by CTC.
oil service business. We saw activity ramp up
Prepared for the recovery (still) quickly from 1995 to 1997; dealt with the slow-
down, beginning in late 1997 and extending
In my letter last year, I described how we had
throughout 1998; and have seen higher prices and
taken steps that would prepare us for the
growing demand for oil and gas lay the ground-
inevitable return to higher activity levels, driven
$790
$786
$728
work for the current recovery, which is now into
by increased oil and gas prices. Included in that
its second year.
preparation was nearly $100 million of research
$528
$513
While the Cooper Cameron name is a relative
and development spending over the past three
newcomer to the industry, our products and rep-
years. We share the general industry view that
utation are not. We have an outstanding base of
spending on oil and gas exploration and develop-
loyal customers, and we’re grateful for every one
ment has not increased as quickly as most of us
of them. Similarly, and not coincidentally, we
96 97 98 99 00
had anticipated. While the demand for our
Backlog
have a very talented group of people who evalu-
(at year-end, $ millions)
ate, plan and execute our business strategies year
after year—and many of them have been doing so
through several oil and gas cycles. Most of them
are also Cooper Cameron shareholders; so their
goals are faithfully aligned with yours and mine.
They deserve our collective thanks.
9. 7
Lastly, I want to express my personal thanks to Sincerely,
one of our directors, who will retire from our
board at this year’s annual meeting. Michael J.
Sebastian has been on our board since Cooper
Cameron’s formation in 1995, and we were Sheldon R. Erikson
fortunate to reap the benefits of his leadership Chairman of the Board,
and experience over the past five years. President and Chief Executive Officer
On behalf of Cooper Cameron’s employees, we
appreciate your support, and we will do our best
to continue the standards of performance and
profitability your Company has established.
11. 9
STATISTICAL/OPERATING
2000 HIGHLIGHTS
($ millions) 2000 1999 1998
Revenues1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $838.3 $817.1 $1,024.7
EBITDA2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148.7 139.3 215.0
EBITDA (as a percent of revenues) . . . . . . . . . . . . . . . . . . . . . . 17.7% 17.0% 21.0%
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.6 38.8 82.0
Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 851.4 619.5 1,074.9
Backlog (as of year-end). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372.3 367.0 592.6
Revised to reclassify shipping and handling costs
1
from revenues to cost of sales.
Excludes nonrecurring/unusual charges.
2
$1,025
$838
$817
Cameron is one of the world’s leading providers of
systems and equipment used to control pressures
98 99 00
and direct flows of oil and gas wells. Products Revenues
($ millions)
include wellheads, Christmas trees, controls, chokes,
$215
blowout preventers and assembled systems,
$149
$139
employed in a wide variety of operating
environments—basic onshore fields, highly 98 99 00
EBITDA
($ millions)
complex onshore and offshore environments, $1,075
deepwater subsea applications and ultra-high $851
$620
temperature geothermal operations.
98 99 00
Orders
($ millions)
$593
< The model “TL” is a lightweight version of the industry’s
most popular and widely used ram-type blowout preventer.
$372
$367
98 99 00
Backlog
(at year-end, $ millions)
12. 10
Cameron’s drilling business remains committed to providing innovative systems solutions
to allow safer, more cost-effective and reliable drilling for its global customers.
Financial overview Cameron’s leading market position in Among recent operational successes,
this business segment provides a large Shell Shearwater, a High Pressure/High
Cameron’s revenues increased to $838.3
installed base requiring aggressive world- Temperature platform in the North Sea,
million in 2000, up three percent from
wide aftermarket support, which results in was commissioned during 2000 using
$817.1 million in 1999. EBITDA (excluding
higher margin and better flowthrough Cameron 5″ 15,000 psi surface Christmas
nonrecurring charges) was up from
sales volume. New business sales will con- trees, including Cameron wellheads, actu-
year-ago levels, reaching $148.7 million,
tinue to shift from the large-bore subsea ators and chokes. More recently, Cameron
compared with 1999’s $139.3 million.
and deepwater market, which fueled provided six platform wellheads and trees
EBITDA as a percent of revenues was 17.7
major drilling business growth from 1997 and assisted in the engineering and start-
percent, up from 17.0 percent.
through 1999, to platform, jackup, land, up of Anadarko’s high-profile Hickory
and specialty blowout preventer tech- and Tanzanite projects offshore Louisiana.
Drilling
nology. For example, Cameron recently Equipment for this high-pressure develop-
Cameron provides surface and subsea received several orders for large-bore sur- ment was delivered on a fast-track schedule,
blowout preventer (BOP) stacks, drilling face-based BOP stacks, including several and production began in December.
riser, drilling valves and choke and kill platform stacks to be delivered into the Operators and industry experts alike
manifolds, as well as hydraulic and multi- Norwegian market. Orders for this equip- remain bullish on the fundamentals for
plexed electro-hydraulic (MUX) control ment are projected to be at the highest natural gas in North America. With con-
systems used to operate surface and subsea level since the early 1980s. tinued high levels of drilling activity
BOP stacks, to multiple customers in the anticipated in key gas-producing regions
drilling business worldwide. Cameron Surface like the Northern Rockies, onshore
also provides complete aftermarket services and offshore Louisiana, the Canadian
Surface equipment represents the
under the CAMSERV™ brand and Foothills and South Texas, Cameron’s
largest component of Cameron’s revenue
replacement parts for drilling equipment, market presence and quality reputation
base, and includes wellheads, Christmas
including elastomer products specifically should allow it to take full advantage of
trees and chokes used on land or installed
designed for drilling applications and increasing demand for surface products.
on offshore platforms. Cameron holds
manufactured at Cameron’s state-of-the-
the leading market position in supplying
art Elastomer Technology facility. Subsea
this type of equipment. Cameron also
Cameron’s drilling business remains
Subsea equipment includes systems,
recently increased its emphasis on supplying
committed to providing innovative systems
products and services associated with
control systems for surface markets.
solutions to allow safer, more cost-effective
underwater drilling and production appli-
The oil and natural gas price recovery
and reliable drilling for its global customers.
cations, including subsea wellheads, mod-
has driven improving demand for
Drilling business revenues decreased in
ular Christmas trees, chokes, manifolds,
Cameron’s surface products. Both majors
2000 compared with 1999, as large-bore
flow bases, modular CAMTROLTM control
and independent operators in North
subsea BOP stacks, MUX control systems,
systems, and flowline connection systems.
America spurred an increase in spending
and drilling riser orders were substantially
The subsea market is another area in
which drove U.S. and Canadian rig counts
completed and delivered for the recent
which Cameron holds a leading share of
to new ten-year highs, with natural gas
newbuild cycle of Mobile Offshore
the installed base worldwide and is one of
drilling the main driver. In this environment,
Drilling Units. Cameron will continue
the primary providers to the industry.
Cameron’s market-leading position as the
to provide the best value delivered for
Highlights of Cameron’s business in this
premier supplier of high pressure surface
drilling systems, maintain its core compe-
market during 2000 included the award
wellheads and trees led to record highs in
tency in this important business segment,
and delivery of the Triton Energy Ceiba
North American surface products orders.
and look to continuous improvement
development off Equatorial Guinea in West
Tightening availability of products and
with regard to reliability and availability
Africa. Cameron’s systems capabilities
personnel justified Cameron’s decision to
of the overall system. With this in mind,
enabled Triton Energy to achieve first oil
implement price increases in the North
a Six Sigma statistically based quality
from Ceiba less than fourteen months
American markets during the fourth
improvement process has been imple-
after field discovery, which set an industry
quarter of 2000. This increase should be
mented. This process is aimed at break-
record for a deepwater development.
reflected in the Company’s results begin-
through improvements in the performance
Cameron’s scope of work includes overall
ning in early 2001, and the impact should
and product commercialization of the
systems engineering and project manage-
become more apparent during the year as
drilling business. The first such project is
previous supply contracts are renewed at
scheduled for completion early in 2001.
the new price levels. Cameron’s focus on
Other projects have been started or are
product quality and service responsiveness
under review.
should assist in the retention of price-sen-
sitive customers.
13. 11
The subsea market is another area in which Cameron holds a leading share of the
installed base worldwide and is one of the primary providers to the industry.
ment, as well as modular SpoolTrees, facilities in the Gulf. In the international Controls’ CAMTROL production control
modular CAMTROL production control arena, Cameron was awarded BG’s system a technical rating higher than all
systems, manifolds, flow bases, subsea Scarab/Saffron project, including subsea other major competitors’ subsea production
wellheads, and pipeline connection trees and related hardware to be installed control systems. Deliveries were completed
systems. The system was designed and offshore Egypt. in 2000 for three major projects: Shell
integrated using MOSAICTM philosophy, Order inquiry and project planning Malampaya, Texaco Captain and Triton
Cameron’s field-proven modular building activity for large-scale subsea projects has Energy Ceiba.
block solution for subsea systems. been at very high levels in 2000 and is Recent new awards for subsea produc-
An equally significant project for expected to continue in 2001. Project tion control systems include Repsol’s
Cameron is the Shell Malampaya Natural activity has been greatest in deepwater Chipiron project in Spain, and Petrobaltic’s
Gas to Power Project, served by Cameron’s areas of the Gulf of Mexico and West development in Poland.
Singapore facility. The Malampaya devel- Africa. Project sanction and order book- Cameron Controls’ two primary manu-
opment will reliably supply natural gas ings have been delayed in both Nigeria facturing, assembly and testing facilities,
directly to three land-based power stations and Angola, however, due to difficulties in in Celle, Germany and Houston, Texas,
that provide more than a third of the negotiation with host governments and completed their second full year of opera-
power requirements for the Philippines. state oil companies over terms and tion in 2000. The new facilities have
This MOSAIC system scope of supply conditions of participation and project succeeded in reducing lead times, increas-
includes modular SpoolTrees, modular control. Project potential for Cameron ing on-time deliveries and improving
CAMTROL production and workover and other critical equipment suppliers is effective manufacturing capacity. The
control systems, subsea wellheads, chokes, unprecedented, with individual projects locations of the two facilities allow
manifolds, flow bases, and pipeline con- ranging in size from $50 million to more Cameron Controls to conveniently serve
nection systems. The system is designed to than $200 million. and support markets worldwide, including
be fault-tolerant so as to ensure a highly West Africa, the North Sea, South America,
reliable gas supply. Cameron Controls Asia Pacific and the Gulf of Mexico.
Finally, the installation and start of Cameron Controls expects to exploit
Although Cameron Controls was
operations of the Texaco Captain subsea opportunities in the controls market
organized as a separate business unit only
development in the United Kingdom sec- in several areas during 2001. CAMTROL
four years ago, Cameron has been in the
tor of the North Sea represents another will be expanded to include all of
controls business since the late 1970s.
milestone. Another MOSAIC solution, Cameron’s controls capabilities, including
Drawing on a long history of research and
Captain’s scope of supply includes production, drilling and workover.
field experience, the Cameron Controls
Christmas trees, modular CAMTROL Continued product development in sub-
organization was formed to design, man-
production control systems, subsea well- sea production controls, bolstered by the
ufacture and service drilling, production
heads, chokes, and a joint venture with successful installation of the projects iden-
and workover control systems worldwide.
Brown & Root providing a football field- tified above, will strengthen and expand
Its early growth was fueled by orders for
sized unitized template manifold. the Company’s market position and product
MUX subsea drilling controls, combining
In each of these endeavors, Cameron’s offerings. The common threads for all
Cameron’s reliable hydraulics with elec-
responsibilities encompassed overall systems CAMTROL systems are modularity, fault
tronic technology to provide the rapid
engineering and project execution. tolerance and integrity assurance to pro-
actuation needed for BOPs in deepwater
In recent activity, Cameron was awarded vide high reliability systems. The drilling
drilling applications. Upgrading Cameron’s
Marathon’s Camden Hills and Total Fina controls focus will be on maintaining
subsea production controls technology
Elf ’s Aconcagua projects in the Gulf of Cameron’s leading market position,
with the state-of-the-art CAMTROL
Mexico. Along with the previously award- attained as a result of providing reliable,
system was a logical extension of
ed BP King/King’s Peak project, this will cost-effective systems for the BOP market,
Cameron’s drilling controls technology.
be the deepest subsea development in the and on enhancing that position by further
CAMTROL now incorporates Cameron’s
world at water depths of more than 7,000 improving the product selection to
drilling control systems and industry-
feet, marking another Cameron first. include innovative emerging market
leading workover control systems.
Cameron was also awarded the subsea drilling controls applications. As a logical
Cameron Controls’ role as a world-class
trees, manifolds and jumpers for BP’s Gulf extension of the above, aftermarket capa-
supplier is confirmed by its current
of Mexico Infrastructure Lead Exploration bilities will be expanded in several markets,
position as the leading supplier of deep-
(ILX) project,a program targeted to increase including Brazil and West Africa, in
water MUX control systems to the drilling
production from numerous pre-existing order to support the growing number of
market. E&P operators are beginning to
controls systems installations worldwide.
recognize Cameron Controls as a signifi-
cant and qualified provider of production
control systems worldwide. In fact, one
of the supermajors awarded Cameron
14. 12
The oil and natural gas price recovery has driven improving
demand for Cameron’s surface products.
Cameron Controls’ customer support and the unique position to supply wellheads,
response effort will benefit from the related Christmas trees, valves, actuators, chokes
CAMSERV efforts and Cameron’s extensive and surface safety systems, the building
network of service facilities. As the largest blocks necessary to provide a complete
global provider of system maintenance single-well surface-automated system.
and support for drilling and production Cameron Willis will continue to grow
systems, Cameron provides the depth and with the offshore markets as projects are
breadth of facilities, equipment, personnel developed in deeper water, creating an
and experience that is required of a cus- ever-increasing demand for this level of
tomer-centric organization. technology, experience and breadth of
product solutions. As surface and subsea
Cameron Willis production activity improves in the wake
of higher oil and gas prices, substantial
Cameron Willis’ product portfolio
opportunities for new orders should
includes Cameron and Willis brand
develop during 2001.
drilling choke systems, and Cameron and
Willis brand chokes and choke actuators
Aftermarket
for the surface and subsea production
markets. Cameron Willis was created in Aftermarket revenues, which have
order to take advantage of opportunities for consistently produced attractive profit
manufacturing consolidation, technology margins (as a result of customers’ willingness
improvement and product cost reduc- to share the life cycle cost reductions
tions. As a result, Cameron Willis has clearly achieved through the application of
established its position as the worldwide CAMSERV), continued to increase as a
market share leader in subsea chokes. percent of total revenue. Meanwhile,
Gate valve actuator product rationaliza- Cameron’s worldwide market share has
tion and manufacturing consolidation, continued to increase, particularly in the
processes completed during 1999, have drilling business.
resulted in lower manufacturing costs in Cameron continues to enhance its
2000. Surface gate valve actuator manu- market presence worldwide. Construction
facturing is primarily provided by the of a new joint venture facility in Saudi
Houston operation, which now accounts Arabia will be completed by the end of
for half of the Cameron Willis shipments. 2001 and will expand Cameron’s after-
Increased focus on actuator manufacturing market capabilities in the Middle East.
lead times and consistently high on-time Efforts will continue to grow the aftermarket
delivery performance from Cameron business through acquisitions, increased
Willis has all but removed the delays penetration of existing markets and identi-
caused by commercial actuator manufac- fication of new markets that can be served
turers, enabling Cameron to shorten the by Cameron’s extensive worldwide facilities.
>
lead times of its Christmas trees. Cameron’s CAMSERV initiatives are
Function testing of a 4 1/16″ API 15,000 psi
Surface Safety Systems that control sur- designed to provide flexible, cost-effective
face actuated gate valves and Christmas solutions to customer aftermarket needs Christmas tree, complete with tubing spool
trees supplied by Cameron continue to be throughout the world. CAMSERV com- and hanger, prior to shipment to Anadarko
a growth market. Cameron’s leading position bines traditional aftermarket services and
Petroleum Corporation’s Hickory platform.
in the surface production (Christmas tree) products, such as equipment maintenance
markets and operators’ desire to automate and reconditioning, with Cameron’s infor-
field operations, thereby lowering operating mation technology toolset. As operators
expenses, make this a natural extension to continue to look for ways to reduce
Cameron’s core business. Cameron is in drilling, completion and production costs,
additional opportunities to provide such
services to customers will develop.
17. 15
STATISTICAL/OPERATING
2000 HIGHLIGHTS
($ millions) 2000 1999 1998
Revenues1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $221.1 $233.6 $311.8
EBITDA2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.1 33.4 60.9
EBITDA (as a percent of revenues) . . . . . . . . . . . . . . . . . . . . . . 16.8% 14.3% 19.5%
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 4.9 5.6
Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228.3 209.8 279.5
Backlog (as of year-end). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.5 32.4 54.4
Revised to reclassify shipping and handling costs
1
from revenues to cost of sales.
Excludes nonrecurring/unusual charges.
2
$312
$234
$221
Cooper Cameron Valves (CCV) is a leading provider
of valves and related systems primarily used to 98 99 00
Revenues
($ millions)
control pressures and direct oil and gas as they
are moved from individual wellheads through flow
$61
$37
$33
lines, gathering lines and transmission systems
to refineries, petrochemical plants and industrial 98 99 00
EBITDA
($ millions)
centers for processing. Equipment used in these
$280
environments is generally required to meet $228
$210
demanding API 6D and American National
Standards Institute (ANSI) standards.
98 99 00
Orders
($ millions)
$54
< Orbit high-integrity valves being readied for shipping.
$42
Orbit’s unique block valve technology provides absolute
$32
positive isolation for a multitude of processes in the gas
processing, petrochemical and refining industries. The
Orbit design is particularly well-suited for applications
demanding long-term performance where frequent 98 99 00
cycling and positive shutoff are of primary importance.
Backlog
(at year-end, $ millions)
18. 16
CCV believes that it is well positioned to benefit from future deepwater activity worldwide
and is proving to be a leader in technology development in this critical environment.
Financial overview Focus on aftermarket continues ductivity improvements in manufacturing
contributed to a higher profit percentage.
CCV’s orders were up approximately Aftermarket growth continued to be
Investment in more efficient equipment,
nine percent during the year, driven a priority throughout the year, with
as well as ongoing analysis of workflows
primarily by growth in the oilfield market. revenues in this area more than doubling
and setup times, enabled the Company to
Revenues were $221.1 million for the year, over 1999. CCV significantly expanded its
further decrease costs.
down five percent from 1999’s $233.6 field services efforts throughout the year,
million. EBITDA (excluding nonrecurring and also acquired Valve Sales Inc., a
2001 outlook
charges) increased to $37.1 million, up 11 Houston-based valve repair company,
percent from the $33.4 million of a year in the first quarter of 2000. CCV will In 2001, CCV is prepared for increased
ago. EBITDA as a percent of revenues continue to evaluate new aftermarket ini- spending activity in its primary pipeline
increased to 16.8 percent, up from 1999’s tiatives, including additional acquisitions market and significant growth in the oil-
14.3 percent. The increased profit margin and grassroots start-ups, in both domestic field. The higher activity levels in CCV’s
in 2000 reflects a full year’s impact of the and international markets. traditional markets will be complemented
cost reduction initiatives that were started by opportunities in the rapidly growing
in 1999, significant productivity improve- Other growth initiatives underway deepwater market, the power generation
ments and a price increase that was initiated sector, and initiatives in the aftermarket
Activity in the power generation sector
in the third quarter of 2000. business. The Company will continue
is expected to be robust in 2001. Based on
Operations restructuring was essentially its foreign sourcing and productivity
a bullish construction outlook, CCV is
completed during 2000 in both Europe improvement programs into 2001, including
dedicating additional resources to sales
and North America. Some minor restruc- an increased capital investment budget
efforts in this market segment. In addition,
turing continues in the Beziers, France designed to reduce lead times and overall
CCV plans to introduce a low-cost butterfly
operation, and CCV has targeted the Far manufacturing cost.
valve as part of the Company’s efforts to
East as a location for future manufacturing broaden its product line. This valve will
due to the low cost of labor and material complement CCV’s existing high-per-
in that region. formance butterfly valve and will be sold
into the industrial and oilfield markets.
Emphasis on subsea market
CCV’s recent product development Investment in
efforts in the subsea market have further web-based technology
enhanced the Company’s position as an CCV views web-enabled electronic
industry technology leader. Development commerce as a powerful tool in streamlining
was completed for a range of ball valves >
operations and communicating with the
capable of performing at pressures of customer. In addition to its existing web- As subsea production depths have continued to
10,000 psi and in water depths of 10,000 site and participation in the OFS Portal increase, Cooper Cameron Valves has recognized
feet. In addition, CCV is part of a consor- initiative, CCV intends to launch a valve
the need for subsea ball valves suitable for the
tium of industry suppliers who have configurator and quotes management system
rigorous demands of high external and internal
developed a technology that enables hot for use by both CCV’s internal sales group
pressures. To meet these challenging require-
tapping of pipelines in water depths down and customers. Both products will enhance
ments, CCV has introduced a line of 2″ to 16″
to 10,000 feet. CCV believes that it is well the ease of doing business with CCV.
ball valves suitable for 10,000 psi of internal
positioned to benefit from future deepwater
pressure and for use in water depths of as
activity worldwide and is proving to be a Foreign sourcing
much as 10,000 feet.
leader in technology development in this and productivity improvements
critical environment. The prototype shown here utilizes the proven
In addition to the Six Sigma program,
technology of the industry-leading Cameron
CCV has continued to aggressively source
welded-body ball valve, and incorporates existing
foreign materials in an effort to reduce
metal-to-metal seat sealing technology. The
product cost while maintaining high
compact, lightweight design of the Cameron
quality standards. Agreements reached
welded-body ball valve make it ideally suited
with suppliers in other countries have
for subsea applications.
contributed to a significant reduction in
material purchase prices. Similarly, pro- Orders are currently in production for a subsea
project in the Gulf of Mexico and for topside use
in South America.
19. 17
CCV’s recent product development efforts in the subsea market have further
enhanced the company’s position as an industry technology leader.
