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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11953
WILLBROS GROUP, INC.
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 98-0160660
(Jurisdiction of incorporation) (I.R.S. Employer Identification Number)
PLAZA BANCOMER BUILDING
50TH STREET, 8TH FLOOR
APARTADO 6307
PANAMA 5, REPUBLIC OF PANAMA
TELEPHONE NO.: (507) 213-0947
(Address, including zip code, and telephone number, including
area code, of principal executive offices of registrant)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common stock, $.05 Par Value New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of March 22, 2001, 14,205,976 shares of the Registrant's Common
Stock were outstanding, and the aggregate market value of the Common Stock held
by non-affiliates was approximately $124,907,999.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Stockholders for the
fiscal year ended December 31, 2000, are incorporated by reference into Parts I
and II of this Form 10-K.
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held May 9, 2001 are incorporated by reference into Part III
of this Form 10-K.
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WILLBROS GROUP, INC.
FORM 10-K
YEAR ENDED DECEMBER 31, 2000
TABLE OF CONTENTS
Page
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PART I
Items 1.
and 2. Business and Properties................................................................ 4
Item 3. Legal Proceedings...................................................................... 23
Item 4. Submission of Matters to a Vote of
Security Holders....................................................................... 23
Item 4A. Executive Officers of the Registrant................................................... 24
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters........................................................ 26
Item 6. Selected Financial Data................................................................ 26
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......................................... 26
Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................. 26
Item 8. Financial Statements and Supplementary Data............................................ 26
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................................................. 26
PART III
Item 10. Directors and Executive Officers of the Registrant..................................... 26
Item 11. Executive Compensation................................................................. 27
Item 12. Security Ownership of Certain Beneficial
Owners and Management.................................................................. 27
Item 13. Certain Relationships and Related Transactions......................................... 27
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K................................................................ 27
Signatures ....................................................................................... 30
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FORWARD-LOOKING STATEMENTS
THIS FORM 10-K INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS, OTHER THAN
STATEMENTS OF HISTORICAL FACTS, INCLUDED OR INCORPORATED BY REFERENCE IN THIS
FORM 10-K WHICH ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS WHICH THE COMPANY
EXPECTS OR ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE, INCLUDING SUCH THINGS AS
FUTURE CAPITAL EXPENDITURES (INCLUDING THE AMOUNT AND NATURE THEREOF), OIL, GAS
AND POWER PRICES AND DEMAND, EXPANSION AND OTHER DEVELOPMENT TRENDS OF THE OIL,
GAS AND POWER INDUSTRIES, BUSINESS STRATEGY, EXPANSION AND GROWTH OF THE
COMPANY'S BUSINESS AND OPERATIONS, AND OTHER SUCH MATTERS ARE FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS ARE BASED ON CERTAIN ASSUMPTIONS AND ANALYSES MADE
BY THE COMPANY IN LIGHT OF ITS EXPERIENCE AND ITS PERCEPTION OF HISTORICAL
TRENDS, CURRENT CONDITIONS AND EXPECTED FUTURE DEVELOPMENTS AS WELL AS OTHER
FACTORS IT BELIEVES ARE APPROPRIATE IN THE CIRCUMSTANCES. HOWEVER, WHETHER
ACTUAL RESULTS AND DEVELOPMENTS WILL CONFORM WITH THE COMPANY'S EXPECTATIONS AND
PREDICTIONS IS SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS INCLUDING
THE TIMELY AWARD OF ONE OR MORE PROJECTS; CANCELLATION OF PROJECTS; EXCEEDING
PROJECT COST AND SCHEDULED TARGETS; FAILING TO REALIZE COST RECOVERIES FROM
PROJECTS COMPLETED OR IN PROGRESS WITHIN A REASONABLE PERIOD AFTER COMPLETION OF
THE RELEVANT PROJECT; IDENTIFYING AND ACQUIRING SUITABLE ACQUISITION TARGETS ON
REASONABLE TERMS; OBTAINING ADEQUATE FINANCING; THE DEMAND FOR ENERGY
DIMINISHING; POLITICAL CIRCUMSTANCES IMPEDING THE PROGRESS OF WORK; GENERAL
ECONOMIC, MARKET OR BUSINESS CONDITIONS; CHANGES IN LAWS OR REGULATIONS; THE
RISK FACTORS LISTED IN THIS FORM 10-K AND LISTED FROM TIME TO TIME IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION; AND OTHER
FACTORS, MOST OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY. CONSEQUENTLY, ALL
OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FORM 10-K ARE QUALIFIED BY THESE
CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE THAT THE ACTUAL RESULTS OR
DEVELOPMENTS ANTICIPATED BY THE COMPANY WILL BE REALIZED OR, EVEN IF
SUBSTANTIALLY REALIZED, THAT THEY WILL HAVE THE EXPECTED CONSEQUENCES TO OR
EFFECTS ON THE COMPANY OR ITS BUSINESS OR OPERATIONS. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE PUBLICLY ANY SUCH FORWARD-LOOKING STATEMENTS, WHETHER AS A
RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
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PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
Willbros Group, Inc. and all of its majority-owned subsidiaries (the
"Company") is one of the leading independent contractors serving the oil, gas
and power industries, providing construction, engineering and specialty services
to industry and government entities worldwide. The Company places particular
emphasis on projects in developing countries where the Company believes its
experience gives it a competitive advantage. The Company's construction services
include the building and replacement of major pipelines and gathering systems,
flow stations, pump stations, gas compressor stations, gas processing
facilities, oil and gas production facilities, piers, dock facilities and
bridges. The Company's engineering services include feasibility studies,
conceptual and detailed design, field services, material procurement and overall
project management. The Company's specialty services include dredging, pipe
coating, pipe double jointing, removal and installation of flowlines,
fabrication of piles and platforms, maintenance and repair of pipelines,
stations and other facilities, pipeline rehabilitation, general oilfield
services, transport of oilfield equipment, rigs and vessels and facility
operations. The Company's backlog was $373.9 million at December 31, 2000,
compared to $253.1 million at December 31, 1999.
The Company provides its services utilizing a large fleet of Company-owned
equipment comprised of, among other things, marine vessels, barges, dredges,
pipelaying equipment, heavy construction equipment, transportation equipment and
camp equipment. At March 12, 2001, the Company had approximately 625 units of
heavy construction equipment, 843 units of transportation equipment and 5,025
units of support equipment. The Company's equipment fleet is supported by
warehouses of spare parts and tools, which are located to maximize availability
and minimize cost.
The Company traces its roots to the construction business of Williams
Brothers Company, founded in 1908. Through successors to that business, Willbros
has completed many landmark projects around the world, including the "Big Inch"
and "Little Big Inch" War Emergency Pipelines (1942-44), the Mid-America
Pipeline (1960), the TransNiger Pipeline (1962-64), the Trans-Ecuadorian
Pipeline (1970-72), the northernmost portion of the Trans-Alaskan Pipeline
System (1974-76), the All American Pipeline System (1984-86), Colombia's Alto
Magdalena Pipeline System (1989-90), and a portion of the Pacific Gas
Transmission System expansion (1992-93). In September 2000, the Company, though
a joint venture led by a subsidiary of the Company, was awarded yet another
landmark project, the scope of which includes the engineering, procurement and
construction ("EPC") of a 665-mile (1,070 kilometer), 30-inch crude oil pipeline
from the Doba Fields in Chad to an export terminal on the coast of Cameroon in
Africa (the "Chad-Cameroon Pipeline Project").
Over the years, Willbros has been employed by more than 400 clients to
carry out work in 55 countries. Within the past 10 years, Willbros has worked in
Africa, Asia, Australia, the Middle East, North America and South America.
Willbros' relatively steady base of ongoing construction, engineering and
specialty services operations in Nigeria, Oman, the United States and Venezuela
has been enhanced by major construction and engineering projects in Abu Dhabi,
Australia, Cameroon, Colombia, Egypt, Gabon, Indonesia, Ivory Coast, Kuwait,
Morocco, Nigeria, Oman, Pakistan, Russia, the United States and Venezuela.
Representative clients (or affiliates of clients) of the Company include
Royal Dutch Shell; Asamera (Overseas) Limited; Apache Cote d'lvoire; Pecten
Cameroon; Bilfinger + Berger; Conoco; Chevron; Kuwait Oil Company; Abu Dhabi
National Oil Company; U.S. Army; U.S. Navy; Pacific Gas & Electric; Petroleum
Development Oman; Enron; El Paso Energy; Petroleos de Venezuela S.A. ("PDVSA");
Transredes; Occidental Petroleum; Duke Energy; Great Lakes Gas Transmission
Company; E.N.I.; The Williams Companies; Nigerian National Petroleum Corporation
("NNPC"); and the Pak-Arab Refinery, Ltd. ("PARCO"). Private sector clients such
as Royal Dutch Shell have historically accounted for the majority of the
Company's revenue. Government entities and agencies, such as Kuwait Oil
Company, U.S. Army, U.S. Navy, NNPC and PDVSA, have accounted for the remainder.
Ten clients were responsible for 84%
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of the Company's total revenue in 2000 (67% in 1999 and 78% in 1998). Operating
units of Royal Dutch Shell accounted for 44% and Duke Energy accounted for 11%
of the Company's total revenue in 2000.
The Company is incorporated in the Republic of Panama and maintains its
headquarters at Plaza Bancomer Building, 50th Street, 8th Floor, Apartado 6307,
Panama 5, Republic of Panama; its telephone number is (507) 213-0947.
Administrative services for the Company are provided by Willbros USA, Inc.,
whose administrative headquarters is located at 4400 Post Oak Parkway, Suite
1000, Houston, Texas 77027 and telephone number is (713) 403-8000.
CURRENT MARKET CONDITIONS
The world's economies have begun their recovery following the downturn of
1997-98. This fact, along with current oil and gas prices, suggests that many
significant development projects and energy infrastructure projects will now
likely proceed, including a number of projects in emerging markets which were
put on hold over the past two to three years. Activity in the Company's key
markets appears to be improving and management believes the Chad-Cameroon
Pipeline Project awarded in September 2000 is the first of several major
projects which will characterize this cycle in the industry. These projects
include natural gas, crude oil and petroleum products pipeline systems, LNG
projects and ancillary projects. Industry sources estimate that worldwide
pipeline construction expenditures will be approximately $17.0 billion for
projects completed in 2001 and another $63.5 billion for projects planned to be
completed after 2001.
The Company believes that certain of these projects will meet its bidding
criteria, and that the Company's worldwide pipeline construction, engineering
and specialty services experience places it in an advantageous position to
compete for such projects. The Company currently has a number of significant
bids outstanding with respect to potential contract awards in Bolivia, Cameroon,
Chad, Ecuador, Nigeria, Oman, the United States and Venezuela. The Company is
currently preparing bids with respect to potential contract awards in Abu Dhabi,
Nigeria, Oman, Saudi Arabia, the United States and Venezuela. Finally, the
Company expects to prepare and submit bids with respect to certain other
potential construction and engineering projects in Africa, Asia, the Middle
East, North America and South America during 2001.
Over the long term, the Company believes several factors influencing the
global energy market have led to and will continue to result in increased
activity across the types of service it provides. The factors leading to higher
levels of energy-related capital expenditures include: (a) rising global energy
demand resulting from economic growth in developing countries; (b) the
privatization of certain state-controlled oil and gas companies; (c) the need
for larger oil and gas transportation infrastructures in a number of developing
countries, and (d) the increasing role of natural gas as a fuel for power
generation.
BUSINESS STRATEGY
The Company seeks to maximize stockholder value through its business
strategy. The core elements of this strategy are: (a) to concentrate on projects
and prospects in areas where it can be most competitive and obtain the highest
profit margins; (b) pursue engineer-procure-construct contracts with a renewed
vigor because they can often yield higher profit margins than construction-only
contracts; (c) focus on performance and project execution in order to maximize
the profit potential on each contract awarded; (d) maintain its commitment to
safety and quality; (e) develop alliances with companies who will enhance its
capability and competitiveness in markets throughout the world, and (f) pursue
growth through expansion, mergers, acquisitions and equity investments while
maintaining a strong balance sheet.
In pursuing this strategy, the Company relies on the competitive advantage
gained from its experience in completing logistically complex and technically
difficult projects in remote areas with difficult terrain and harsh climatic
conditions, and its experienced multinational work force of approximately 2,200
employees, of whom more than 80 percent are citizens of the respective countries
in which they work. Recognizing our employees as our most sustainable
competitive advantage, the Company continues to
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invest in its employees to ensure that they have the training and tools needed
to be successful in today's challenging environment.
The Company's short-term strategy during the past two years has been to
reduce operating and overhead costs to a level that is justified by expected
revenues. To accomplish this strategy, the Company downsized operations or
offices in work countries where expected returns have not materialized,
identified and sold surplus equipment and continues to evaluate administrative
systems and employee benefits. The Company's long-term strategies remain
unchanged. In carrying out the core elements of its long-term strategies, the
Company builds from the following.
Geographic Area. The Company's objective is to maintain and enhance its
presence in regions where it has developed a strong base of operations, such as
Africa, the Middle East, North America and South America, by capitalizing on its
local experience, established contacts with local customers and suppliers, and
familiarity with local working conditions. In addition, the Company seeks to
establish a presence in other strategically important areas, such as Algeria,
Bolivia, Cameroon, Canada, Chad, Ecuador and Saudi Arabia as well as other
selected areas. In pursuing this strategy, the Company seeks to identify a
limited number of long-term niche markets in which the Company can outperform
the competition and establish an advantageous position.
Strategic Alliances. The Company seeks to establish strategic alliances
with companies whose resources, skills and strategies are complementary to and
are likely to enhance the Company's business opportunities, including the
formation of joint ventures and consortia to achieve competitive advantage and
share risks. Such alliances have already been established in Argentina,
Australia, Bolivia, Cameroon, Chad, Indonesia, Malaysia, Thailand, the United
States and Venezuela. As a related strategy, the Company may decide to make an
equity investment in a project in order to enhance its competitive position
and/or maximize project returns. This strategy led in 1998 to the Company's
Venezuelan subsidiary taking a 10 percent equity interest in a 16-year contract
to operate, maintain and refurbish water injection facilities in Lake Maracaibo,
Venezuela. Another example is, in 2000, a joint venture in which another of the
Company's subsidiaries has a 50 percent equity interest received a contract for
the construction of the Chad-Cameroon Pipeline Project.
Acquisitions. The Company seeks to identify, evaluate and acquire
companies that offer growth opportunities and the ability to complement the
Company's resources and capabilities. Consistent with this strategy, in January
2000, the Company acquired Rogers & Phillips, Inc., a closely held pipeline
construction company in Houston, Texas with an experienced management team and a
strong market position in the U.S. Gulf Coast area.
Quality Improvements. The Company's quality program enhances the
Company's ability to meet the specific requirements of its customers through
continuous improvement of all its business processes, while at the same time
improving competitiveness and profitability. ISO 9000, an internationally
recognized verification system for quality management, has in recent years been
made a criterion for prequalification of contractors by certain clients and
potential clients, and this trend is expected to continue. The certification
process involves a rigorous review and audit of the Company's management
processes and quality control procedures. Currently, four of the Company's key
operating subsidiaries currently have ISO 9000 certification.
Conservative Financial Management. The Company emphasizes the
maintenance of a conservative balance sheet in order to finance the development
and growth of its business. The Company also seeks to obtain contracts that are
likely to result in recurring revenues in order to partially mitigate the
cyclical nature of its construction and engineering businesses. For example, the
Company generally seeks to obtain specialty services contracts of more than one
year in duration. Additionally, the Company acts to minimize its exposure to
currency fluctuations through the use of U.S. dollar-denominated contracts
whenever possible, by limiting payments in local currency to approximately the
amount of local currency expenses, and otherwise by engaging in hedging
activities such as purchasing foreign currency forward contracts. The Company
had no forward contracts at December 31, 2000.
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WILLBROS BACKGROUND
The Company is the successor to the pipeline construction business of
Williams Brothers Company, which was started in 1908 by Miller and David
Williams. In 1949, the business was reconstituted and acquired by the next
generation of the Williams family. The resulting enterprise eventually became
The Williams Companies, Inc., a major U.S. energy, communications and interstate
natural gas and petroleum products transportation company ("Williams").
In 1975, Williams elected to discontinue its pipeline construction
activities and, in December 1975, sold substantially all of the non-U.S. assets
and entities comprising its pipeline construction division to a newly formed
Panama corporation (eventually renamed "Willbros Group, Inc.") owned by
employees of the division. In 1979, Willbros Group, Inc. retired its debt
incurred in the acquisition by selling a 60 percent equity interest to Heerema
Holding Construction, Inc. ("Heerema"). In 1986, Heerema acquired the balance of
Willbros Group, Inc., which then operated as a wholly owned subsidiary of
Heerema until April 1992.
In April 1992, Heerema sold Willbros Group, Inc. to a corporation formed
December 31, 1991, in the Republic of Panama by members of the Company's
management, certain other investors, and Heerema. Subsequently, the original
Willbros Group, Inc. was dissolved into the acquiring corporation which was
renamed "Willbros Group, Inc." In August 1996, the Company completed an initial
public offering of Common Stock in which Heerema sold all of its shares of
Common Stock; and in October 1997, the Company completed a secondary offering in
which such other investors sold substantially all of their shares of Common
Stock.
The term "Willbros," as used in this Form 10-K, includes the Company, the
original Willbros Group, Inc. and their predecessors in the pipeline
construction business, as described above. All references in this Form 10-K to
the "Company" refer to Willbros Group, Inc. ("WGI") and its consolidated
subsidiaries.
WILLBROS MILESTONES
The following are selected milestones which Willbros has achieved:
1915 Began pipeline work in the United States.
1939 Began international pipeline work in Venezuela.
1942-44 Served as principal contractor on the "Big Inch" and "Little Big
Inch" War Emergency Pipelines in the United States which delivered
Gulf Coast crude oil to the Eastern Seaboard.
1947-48 Built the 370-mile (600-kilometer) Camiri to Sucre and Cochabamba
crude oil pipeline in Bolivia.
1951 Completed the 400-mile (645-kilometer) western segment of the
Trans-Arabian Pipeline System in Jordan, Syria and Lebanon.
1954-55 Built Alaska's first major pipeline system, consisting of 625 miles
(1,000 kilometers) of petroleum products pipeline, housing,
communications, two tank farms, five pump stations, and marine dock
and loading facilities.
1956-57 Led a joint venture which constructed the 335-mile (535-kilometer)
southern section of the Trans-Iranian Pipeline, a products pipeline
system extending from Abadan to Tehran.
1958 Constructed pipelines and related facilities for the world's largest
oil export terminal at Kharg Island, Iran.
1960 Built the first major liquefied petroleum gas pipeline system, the
2,175-mile (3,480-kilometer) Mid-America Pipeline in the United
States, including six delivery terminals, two operating terminals, 13
pump stations, communications and cavern storage.
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1962 Began operations in Nigeria with the commencement of construction of
the TransNiger Pipeline, a 170-mile (275-kilometer) crude oil
pipeline.
1964-65 Built the 390-mile (625-kilometer) Santa Cruz to Sica Sica crude oil
pipeline in Bolivia. The highest altitude reached by this line is
14,760 feet (4,500 meters) above sea level, which management believes
is higher than the altitude of any other pipeline in the world.
1965 Began operations in Oman with the commencement of construction of the
175-mile (280-kilometer) Fahud to Muscat crude oil pipeline system.
1967-68 Built the 190-mile (310-kilometer) Orito to Tumaco crude oil pipeline
in Colombia, one of five Willbros crossings of the Andes Mountains, a
project notable for the use of helicopters in high-altitude
construction.
1969 Completed a gas gathering system and 105 miles (170 kilometers) of
42-inch trunkline for the Iranian Gas Trunkline Project (IGAT) in
Iran to supply gas to the USSR.
1970-72 Built the Trans-Ecuadorian Pipeline, consisting of 315 miles (505
kilometers) of 20- and 26-inch pipeline, seven pump stations, four
pressure-reducing stations and six storage tanks.
1974-76 Led a joint venture which built the northernmost 225 miles (365
kilometers) of the Trans- Alaskan Pipeline System.
1974-76 Led a joint venture which constructed 290 miles (465 kilometers) of
pipeline and two pump stations in the difficult to access western
Amazon basin of Peru.
1974-79 Designed and engineered the 500-mile (795-kilometer) Sarakhs-Neka gas
transmission line in northeastern Iran.
1976-79 Acted as technical leader of a consortium which designed and supplied
six modularized gas compressor stations totaling 726,000 horsepower
for the 56-inch Urengoy to Chelyabinsk gas pipeline system in western
Siberia.
1982-83 Built the Cortez carbon dioxide pipeline system in the southwestern
United States, consisting of 505 miles (815 kilometers) of 30-inch
pipe.
1984-86 Constructed, through a joint venture, the All American Pipeline
System, a 1,240-mile (1,995-kilometer), 30-inch heated pipeline,
including 23 pump stations, in the United States.
1984-95 Developed and furnished a rapid deployment fuel pipeline distribution
and storage system for the U.S. Army which was used extensively and
successfully in Saudi Arabia during Operation Desert Shield/Desert
Storm in 1990/1991 and in Somalia during 1993.
1985-86 Built a 185-mile (300-kilometer), 24-inch crude oil pipeline from
Ayacucho to Covenas in Colombia.
1987 Rebuilt 25 miles (40 kilometers) of the Trans-Ecuadorian crude oil
pipeline within six months after major portions were destroyed by an
earthquake.
1988-92 Performed project management, engineering, procurement and field
support services to expand the Great Lakes Gas Transmission System in
the northern United States. The expansion involved modifications to
13 compressor stations and the addition of 660 miles (1,060
kilometers) of 36-inch pipeline in 50 separate loops.
1989-90 Built the Alto Magdalena Pipeline System in Colombia, consisting of
250 miles (400 kilometers) of 20-inch crude oil pipeline, one pump
station and a tank farm.
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1989-92 Provided pipeline engineering and field support services for the Kern
River Gas Transmission System, a 36-inch pipeline project extending
over 685 miles (1,100 kilometers) of desert and mountains from
Wyoming to California in the United States.
1992-93 Rebuilt oil field gathering systems in Kuwait as part of the post-war
reconstruction effort.
1992-93 Built 150 miles (240 kilometers) of 42-inch pipeline in Oregon to
expand the Pacific Gas Transmission System.
1992-94 Resumed activities in the C.I.S. Selected to develop export pipeline
system for Caspian Pipeline Consortium from Tengiz field in Kazakstan
to Black Sea oil terminal at Novorossiysk, Russia, and established a
representative office and joint stock company in Russia.
1994 Re-entered Venezuela oil service market through the acquisition of
Construcciones Acuaticas Mundiales, S.A. ("CAMSA").
1995 Entered into an agreement with a Japanese trading company providing
for the joint development of projects in selected markets in
Southeast Asia and established an office in Jakarta, Indonesia, to
pursue major projects in the region.
1995-97 Executed two contracts in Pakistan for construction, material
procurement and engineering of the MFM Pipeline Extension Project,
which consisted of 225 miles (365 kilometers) of 18- and 16-inch
multi-product pipeline and related facilities.
1996 Listed shares in an initial public offering of Common Stock on the
NYSE under the symbol "WG."
1996-97 Achieved ISO Certification for seven operating companies.
1996-98 Performed an EPC contract with Asamera (Overseas) Limited to design
and construct pipelines, flowlines and related facilities for the
Corridor Block Gas Project located in southern Sumatra, Indonesia.
1997-98 Carried out a contract for the construction of 120 miles (200
kilometers) each of 36- and 20-inch pipelines in the Zuata Region of
the Orinoco Belt in Venezuela.
1997-98 Executed a contract with an MW Kellogg joint venture for the
construction of a 35-mile (55-kilometer) gas pipeline for a LNG plant
in Kalimantan, Indonesia, furthering the Company's efforts to
establish Indonesia as an ongoing work country.
1997-98 Completed an EPC contract for El Paso Natural Gas Company and
Gasoductos de Chihuahua, a joint venture between El Paso and PEMEX,
to construct a 45-mile (75-kilometer) gas pipeline system in Texas
and Mexico.
1998 Made a 10 percent equity investment in a consortium which was awarded
a 16-year contract to build, operate and transfer water injection
facilities on Lake Maracaibo in Venezuela.
1998 Acquired a multi-purpose marine construction barge to pursue shallow
water pipelay, utility and maintenance opportunities in offshore West
Africa.
1999-00 Carried out a contract through a joint venture to construct a
492-mile (792-kilometer), 18-inch gas pipeline in Australia.
2000 Acquired Rogers & Phillips, Inc., a United States pipeline
construction company.
2000 Awarded an EPC contract for the 665-mile (1,070 kilometer), 30-inch
crude oil Chad-Cameroon Pipeline Project, through a joint venture
with Spie Capag(Jersey) Ltd.
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2000 Relocated the Willbros USA, Inc. administrative headquarters from
Tulsa, Oklahoma to Houston, Texas.
SERVICES PROVIDED
The Company operates in a single operating segment providing contract
construction, engineering and specialty services to the oil, gas and power
industries. The following table reflects the Company's contract revenue by type
of service for 2000, 1999 and 1998.
YEAR ENDED DECEMBER 31,
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2000 1999 1998
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AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN THOUSANDS)
Construction services ........ $192,270 61% $ 67,690 38% $185,995 66%
Engineering services ......... 58,709 19 70,500 40 63,258 22
Specialty services ........... 63,311 20 38,374 22 32,365 12
-------- -------- -------- -------- -------- --------
Total ................... $314,290 100% $176,564 100% $281,618 100%
======== ======== ======== ======== ======== ========
Construction Services
The Company is one of the most experienced contractors serving the oil, gas
and power industries. The Company's construction capabilities include the
expertise to construct and replace large-diameter cross-country pipelines; to
construct oil and gas production facilities, pump stations, flow stations, gas
compressor stations, gas processing facilities and other related facilities; and
to construct piers, docks and bridges.
Pipeline Construction. World demand for pipelines results from the need
to move millions of barrels of crude oil and petroleum products and billions of
cubic feet of natural gas to refiners, processors and consumers each day.
Pipeline construction is capital-intensive, and the Company owns, operates and
maintains a fleet of specialized equipment necessary for it to engage in the
pipeline construction business. The Company focuses on pipeline construction
activity in remote areas and harsh climates where it believes its experience
gives it a competitive advantage. Willbros believes that it has constructed more
miles of pipeline than any other private sector company.
The construction of a cross-country pipeline involves a number of
sequential operations along the designated pipeline right-of-way. These
operations are virtually the same for all overland pipelines, but personnel and
equipment may vary widely depending upon such factors as the time required for
completion, general climatic conditions, seasonal weather patterns, the number
of road crossings, the number and size of river crossings, terrain
considerations, extent of rock formations, density of heavy timber and amount of
swamp. Construction often involves separate crews to perform the following
different functions: clear the right-of-way; grade the right-of-way; excavate a
trench in which to bury the pipe; haul pipe to intermediate stockpiles from
which stringing trucks carry pipe and place individual lengths (joints) of pipe
alongside the ditch; bend pipe joints to conform to changes of direction and
elevation; clean pipe ends and line up the succeeding joint; perform various
welding operations; non-destructively inspect welds; clean pipe and apply
anti-corrosion coatings; lower pipe into the ditch; backfill the ditch; bore and
install highway and railroad crossings; drill, excavate or dredge and install
pipeline river crossings; tie in all crossings to the pipeline; install mainline
valve stations; conduct pressure testing; install cathodic protection system;
and perform final clean up.
Special equipment and techniques are required to construct pipelines across
wetlands. The Company uses swamp pipelaying methods extensively in Nigeria,
where most of its construction operations are carried out in the Niger River
delta. In addition to primary equipment such as laybarges, dredges and swamp
backhoes, the Company has a substantial investment in support vessels, including
tugboats, barges, supply boats and houseboats, which are required in order to
maintain a capability in swamp pipeline construction.
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Station Construction. Oil and gas companies require various facilities
in the course of producing, processing, storing and moving oil and gas. The
Company is experienced in and capable of constructing facilities such as pump
stations, flow stations, gas processing facilities, gas compressor stations and
metering stations. The Company is capable of building such facilities onshore,
offshore, in shallow water or in swamp locations. The construction of station
facilities, while not nearly as capital-intensive as pipeline construction, is
generally characterized by complex logistics and scheduling, particularly on
projects in locations where seasonal weather patterns limit construction
options, and in countries where the importation process is difficult. Willbros'
capabilities have been enhanced by its experience in dealing with such
challenges in numerous countries around the world.
Marine Construction. The Company constructs and installs fixed drilling
and production platforms in Venezuela, primarily in Lake Maracaibo, and is also
capable of building bridges, docks, jetties and mooring or breasting dolphins.
The Company's marine fleet includes pile driving barges, derrick barges and
other vessels, which support marine construction operations. During 1998, the
Company purchased a combination derrick/lay barge (the "Willbros 318") to
perform shallow water pipelay and maintenance projects in offshore West Africa.
This 300-foot (91-meter) barge is capable of laying up to 24-inch diameter pipe
in up to 250-foot water depths.
Engineering Services
The Company provides engineering, project management and material
procurement services to the oil, gas and power industries and government
agencies. The Company specializes in providing engineering services to assist
clients in constructing or expanding pipeline systems, compressor stations, pump
stations, fuel storage facilities, and field gathering and production
facilities. Through experience, the Company has developed expertise in
addressing the unique engineering issues involved with pipeline systems and
associated facilities to be installed where climatic conditions are extreme,
where areas of environmental sensitivity must be crossed, where fluids which
present extreme health hazards must be transported, and where fluids which
present technical challenges regarding material selection are to be transported.
To complement its engineering services, the Company also provides a full
range of field services, including surveying, right-of-way acquisition, material
receiving and control, construction inspection and facilities startup
assistance. Such services are furnished to a number of oil, gas, power and
government clients on a stand-alone basis; and, in addition, are provided as
part of EPC contracts undertaken by the Company.
Climatic Constraints. In the design of pipelines and associated
facilities to be installed in harsh environments, special provisions for
metallurgy of materials and foundation design must be addressed. The Company is
experienced in designing pipelines for arctic conditions, where permafrost and
extremely low temperatures are prevalent, and for desert conditions, mountainous
terrain and swamps.
Environmental Impact of River Crossings. The Company has considerable
capability in designing pipeline crossings of rivers and streams in such a way
as to minimize environmental impact. The Company possesses expertise to
determine the optimal crossing techniques (e.g., open cut, directionally-drilled
or overhead) and to develop site-specific construction methods to minimize bank
erosion, sedimentation and other environmental impacts.
Seismic Design and Stress Analysis. Company engineers are experienced
in seismic design of pipeline crossings of active faults and areas where
liquefaction or slope instability may occur due to seismic events. Company
engineers also carry out specialized stress analyses of piping systems that are
subjected to expansion and contraction due to temperature changes, as well as
loads from equipment and other sources.
Hazardous Materials. Special care must be taken in the design of
pipeline systems transporting sour gas. Sour gas not only presents challenges
regarding personnel safety (hydrogen sulfide leaks can be extremely hazardous),
but also requires that material be specified to withstand highly corrosive
conditions.
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Hydraulics Analysis for Fluid Flow in Piping Systems. The Company
employs engineers with the specialized knowledge necessary to address properly
the effects of both steady state and transient flow conditions for a wide
variety of fluids transported by pipelines (natural gas, crude oil, refined
petroleum products, natural gas liquids, carbon dioxide and water). This
expertise is important in optimizing the capital costs of pipeline projects
where pipe material costs typically represent a significant portion of total
project capital costs.
Natural Gas Transmission Systems. The expansion of the natural gas
transportation network in the United States in recent years has been a major
contributor to the engineering business of the Company. The Company believes it
has established a strong position as a leading supplier of engineering services
to natural gas pipeline transmission companies in the United States. Since 1988,
Willbros has provided, or is providing, engineering services for ten major
natural gas pipeline projects in the United States, totaling more than 7,679
miles (12,365 kilometers) of large diameter pipe for new systems and expansions
of existing systems. During this same period, Willbros was also the engineering
contractor for 33 compressor stations (or additions to existing stations) for 14
clients.
Liquids Pipelines and Storage Facility Design. Willbros has engineered
a number of crude oil and refined petroleum products systems throughout the
world, and has become recognized for its expertise in the engineering of systems
for the storage and transportation of petroleum products and crude oil. In
recent years, the Company has been responsible for the engineering of a major
expansion of a products pipeline system in the United States, involving 395
miles (640 kilometers) of pipeline in New Mexico and Texas. Currently, the
Company is providing engineering and field services for conversion of a natural
gas system in the Midwest United States, involving over 794 miles (1,279
kilometers) of 24-26-inch diameter pipeline to serve the upper Midwest with
refined petroleum products.
U.S. Government Services. Since 1981, Willbros has established its
position with U.S. government agencies as a leading engineering contractor for
jet fuel storage and aircraft fueling facilities, having performed the
engineering for major projects at seven U.S. military bases including three air
bases outside the U.S. The award of these projects was based largely on
contractor experience and personnel qualifications.
Design of Peripheral Systems. The Company's expertise extends to the
engineering of a wide range of project peripherals, including various types of
support buildings and utility systems, power generation and electrical
transmission, communications systems, fire protection, water and sewage
treatment, water transmission, roads and railroad sidings.
Material Procurement. Because material procurement plays such a
critical part in the success of any project, the Company maintains an
experienced staff to carry out material procurement activities. Material
procurement services are provided to clients as a complement to the engineering
services performed for a project. On engineering, procurement and construction
contracts undertaken by the Company, material procurement is especially critical
to the timely completion of construction. The Company maintains a computer-based
material procurement, tracking and control system, which utilizes software
enhanced to meet the Company's specific requirements.
Specialty Services
The Company provides a wide range of support and ancillary services related
to the construction, operation, repair and rehabilitation of pipelines.
Frequently, such services require the utilization of specialized equipment,
which is costly and requires operating expertise. Due to the initial equipment
cost and operating expertise required, many client companies contract for the
use of such specialized equipment and experienced personnel. The Company owns
and operates a variety of specialized equipment that is used to support
construction projects and to provide a wide range of oilfield services. The
following is a description of the primary types of specialty services.
Dredging. The Company conducts dredging operations on its own projects
and as a subcontractor to other companies. Dredging equipment is required to
pump sand to establish a land location in a swamp and to excavate trenches for
pipelines in swamps or offshore locations and for river crossings. Dredging
equipment is also used to maintain required depth of navigation channels for
barges and other watercraft.
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This maintenance dredging is often performed under annual or multi-year
contracts. The Company owns a fleet of dredges, including cutter suction dredges
and grab dredges, which are routinely used in Nigeria and can be readily
deployed to other projects in the region.
Pipe Coating. The Company owns and operates coating equipment, which
applies a variety of protective anti-corrosion coatings to the external surface
of line pipe. The external coating is required to protect buried pipe in order
to mitigate external corrosion.
Concrete Weight Coating. Pipelines installed in wetlands or marine
environments must be heavy enough to offset the buoyancy forces on the buried
pipeline to keep the pipeline from floating out of the ditch. The most effective
method of achieving the required negative buoyancy is concrete coating applied
over the anti-corrosion coating to a calculated thickness. The Company owns and
operates a facility in Nigeria to apply concrete weight coating to line pipe.
Pipe Double-Jointing. Large diameter pipe for onshore pipeline projects
is normally manufactured in 40-foot (12-meter) nominal lengths (joints) to
facilitate ocean transportation. On long distance, large diameter pipeline
projects, it is usually economical to weld two joints into an 80-foot (24-meter)
double joint at a location or locations along the pipeline route. This technique
reduces the amount of field welding by 50 percent, and, because welding is often
the critical operation, it may accelerate construction of the pipeline. The
double-joint welds are made with a semi-automatic submerged arc welding process,
which produces high quality, consistent welds at lower costs than field welding.
The Company owns two transportable self-contained double-joint plants, which can
handle 24- to 48-inch diameter pipe and are used worldwide.
Piling. The Company's subsidiary in Venezuela specializes in the
fabrication and installation of 36-inch concrete piles up to 220 feet (67
meters) in length. These piles are used to construct marine facilities such as
drilling platforms, production platforms, bridges, docks, jetties and mooring or
breasting dolphins. The Company also owns barges and pile driving equipment to
install piles in Venezuela and Nigeria.
Marine Heavy Lift Services. The primary equipment used for offshore oil
and gas production facilities is usually manufactured on skids at the vendor's
shop and transported to the production site by ocean-going water craft. The
Company owns a variety of heavy lift barges and tugs to transport such equipment
from the receiving country port to the production location and to install the
equipment on the platforms. Other services include marine salvage and dry-dock
facilities for inland water barges.
Transport of Dry and Liquid Cargo. Exploration and production
operations in marine environments require logistical support services to
transport a variety of liquid and dry cargo to the work sites. The Company owns
and operates a diversified fleet of marine equipment to provide transportation
services to support these operations in Nigeria and Venezuela.
Rig Moves. Derricks used for drilling oil and gas wells and for well
work-overs require heavy transportation equipment to move such equipment, tanks
and storage vessels between well locations. The Company owns a fleet of heavy
trucks and trailers, and provides transportation services to its clients in Oman
and Venezuela.
Maintenance and Repair Services. The Company provides a wide range of
other services including mechanical, electrical, instrumentation, civil works,
road maintenance and provision of camp services for operating personnel
associated with operation and maintenance of oil and gas gathering systems and
production equipment.
Facility Operations. The Company, subsequent to the design,
commissioning and start-up phases of contracts, provides facility operations
services to those clients desiring third party operations of facilities.
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GEOGRAPHIC REGIONS
The Company operates in the following geographic regions: Africa, Asia and
Australia, the Middle East, North America and South America. The following table
reflects the Company's contract revenue by geographic region for 2000, 1999 and
1998.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
2000 1999 1998
--------------------- --------------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- -------- -------- --------
(DOLLAR AMOUNTS IN THOUSANDS)
Africa ....................... $161,556 51% $ 79,777 45% $ 64,180 23%
North America ................ 92,998 30 42,981 24 91,801 33
South America ................ 26,141 8 23,801 14 75,350 26
Asia and Australia ........... 20,687 7 21,979 12 32,481 12
Middle East .................. 12,908 4 8,026 5 17,806 6
-------- -------- -------- -------- -------- --------
Total ................... $314,290 100% $176,564 100% $281,618 100%
======== ======== ======== ======== ======== ========
See Note 13 to the Consolidated Financial Statements on page 40 of the Company's
2000 Annual Report to Stockholders (which is incorporated by reference herein)
for additional information about the Company's operations in its work countries.
Africa
Africa has been and will continue to be an important strategic market for
the Company. The Company believes that there will be opportunities to expand its
business in Africa, particularly through the development of natural gas
projects. There are large, potentially exploitable reserves of natural gas in
West Africa, extending from the Ivory Coast to Angola. Depending upon the world
market for natural gas and the availability of financing, the amount of
potential new work could be substantial. The Company intends to maintain its
presence in Africa and seeks to increase its share of available work. Willbros
is currently monitoring or bidding major work prospects in Algeria, Cameroon,
Chad, Gabon, Ghana, Mozambique, Nigeria and Tanzania.
Over the past 50 years, Willbros has completed major projects in a number
of African countries including Algeria, Cameroon, Egypt, Gabon, Ivory Coast,
Libya, Morocco and Nigeria. The Company has management staff resident in Africa,
assisted by engineers, managers and craftsmen with extensive African experience,
capable of providing construction expertise, repair and maintenance services,
dredging operations, pipe coating and engineering support. Strong local
relationships have enabled Willbros to satisfy the varied needs of its clientele
in the region.
Willbros has had a continuous presence in Nigeria since 1962. The Company's
activities in Nigeria are directed from a fully staffed operational base near
Port Harcourt. This 150-acre site includes office and living facilities,
equipment and vehicle repair shops, a marine jetty, warehouses and fabrication
and lay-down areas for both Company and client materials and spare parts. The
Company has diversified its range of services by adding dredging and pipe
coating expertise. Having diverse yet complementary capabilities has often given
the Company a competitive advantage on projects that contain several distinct
work elements within the project's scope of work. For example, the Company
believes that it is currently the only contractor operating in the Nigerian oil
and gas sector capable, on its own, of executing a pipeline construction project
which requires yard coating of line pipe, installation of major water crossings,
and both swamp and cross-country segments of pipeline.
The Company's current activities in Nigeria include two major EPC contracts
for Shell: (a) the Nembe Creek gas gathering pipeline system, and (b) four
concrete barge-mounted gas compressor facilities for Shell's Nembe Creek
Associated Gas project. Other ongoing activities in Nigeria are multi-year
contracts to provide dredging services and swamp flowline maintenance services.
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During 1998, the Company purchased the Willbros 318 to further diversify
its range of services by pursuing shallow water pipelay, utility and maintenance
opportunities in offshore West Africa. Since its purchase, the Company
successfully completed several offshore projects including the installation of
decks and other production facilities on two offshore platforms, five miles (7.5
kilometers) of 8-inch and 10-inch pipelines, a single-point mooring system and a
2-mile, 20-inch offshore pipeline, and performed various other services for
Texaco.
Elsewhere in Africa, the Company completed a gas pipeline construction
contract in Ivory Coast in January 1999 for Apache Cote d'lvoire. In September
2000, the Company, through a joint venture with Spie-Capag(Jersey) Ltd., was
awarded a contract to construct the Chad-Cameroon Pipeline Project. The project
scope includes engineering, procurement, and construction of a 665-mile
(1,070-kilometer), 30-inch crude oil pipeline from the Doba fields in Chad to an
export terminal on the coast of Cameroon. Engineering and procurement activities
began in 2000. Pipeline construction is anticipated to begin in 2001 and end in
2003.
The Company's backlog in Africa was $230.8 million at December 31, 2000,
compared to $150.2 million at December 31, 1999.
Asia and Australia
In June 1999, Duke Energy International awarded a $100 million gas pipeline
construction contract in Australia to a consortium in which a Willbros operating
subsidiary has a 35 percent interest. The 492-mile (792-kilometer), 18-inch
pipeline, completed in 2000, transports natural gas from Longford, Victoria to
Sydney.
In 1999, the Company completed contracts for Pak-Arab Refinery, Ltd.
relating to the MFM Pipeline Extension Project in Pakistan. The contracts
included the supply of project materials, the engineering and construction of
225 miles (365 kilometers) of 18- and 16-inch petroleum products pipeline, the
expansion of an existing terminal (including 267,000 barrels of storage
capacity), the addition of a new terminal and pump station (including 270,000
barrels of storage), the addition of a storage terminal (including 443,000
barrels of storage) and the design of a future pump station.
The relative abundance of undeveloped natural gas resources, along with
environmental concerns, favors the use of natural gas for power generation and
industrial and residential usage in Asia and Australia. However, recent economic
and political difficulties in certain countries in the region have caused the
Company to re-evaluate this market, resulting in downsizing of its Jakarta,
Indonesia office to a minimum level. The Company continues to evaluate
maintaining a presence in the region and continues to monitor work prospects.
The Company had no backlog in Asia and Australia at December 31, 2000,
compared to $19.9 million at December 31, 1999.
Middle East
The Company believes that increased exploration and production activity in
the Middle East will continue to be the primary factor influencing the
construction of new energy transportation systems. The majority of future
transportation projects in the region are expected to be centered around natural
gas due to increased regional demand, governments' realization of gas as an
important asset and an underdeveloped gas transportation infrastructure
throughout the region. The Company is aggressively pursuing business
opportunities throughout the Middle East and is currently bidding work or
monitoring prospects in Abu Dhabi, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and
Yemen.
Willbros operations in the Middle East date back to 1948. It has worked in
most of the countries in the region, with particularly heavy involvement in
Iran, Kuwait, Oman and Saudi Arabia. Currently, the Company has ongoing
operations in Oman, where Willbros has been active for more than 30 years. The
Company maintains a fully staffed facility in Oman with equipment repair
facilities and spare parts on site and offers construction expertise, repair and
maintenance services, engineering support, oil field transport services,
materials procurement and a variety of related services to its clients. In
November 1999, the
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Company was awarded a five-year contract by Oman LNG for general maintenance
services. Other current operations in Oman include a general oilfield services
contract for Occidental of Oman and an ad hoc services contract for Petroleum
Development Oman ("PDO"). Work carried out in Oman during 2000 and 1999 includes
pipeline construction, pipeline maintenance, mechanical services and flowline
work.
The Company's backlog in the Middle East was $6.7 million at December 31,
2000, compared to $11.1 million at December 31, 1999. The Company has active
call out service contracts in place in Oman under which it performs work for
such clients as Occidental and PDO on an as needed basis. Such contracts are not
reflected in backlog.
North America
Willbros has provided services to the U.S. oil and gas industry for more
than 80 years. The Company believes that the United States will continue to be
an important market for its services. Recent deregulation of the electric power
and natural gas pipeline industries in the United States has led to the
consolidation and reconfiguration of existing pipeline infrastructure and the
establishment of new energy transport systems, which the Company expects will
result in continued demand for its services. The demand for natural gas for
industrial and power usage in the United States should increase the requirement
to build new natural gas transportation infrastructure in the region. Supply to
satisfy such market demand for natural gas will come from existing and new
production in Western Canada, the Gulf of Mexico and the Canadian Atlantic
offshore region. Environmental concerns will likely continue to require careful,
thorough and specialized professional engineering and planning for all new
facilities within the oil, gas and power sectors. Furthermore, the demand for
replacement and rehabilitation of pipelines is expected to increase as pipeline
systems in the United States approach the end of their design lives and
population trends influence overall energy needs.
Willbros is recognized as an industry leader in the United States for
providing state-of-the-art engineering and construction services. The Company
maintains a staff of experienced management, construction, engineering and
support personnel in the United States. Currently, the Company is providing
project management and engineering services for the following projects: the
Gulfstream Natural Gas System to transport natural gas from southern Alabama and
Mississippi to markets throughout central and south Florida; CMS Gas
Transmission's Guardian Pipeline Project to transport natural gas from the
Chicago area into Wisconsin; Southern Natural Gas Company's Southern Company
Expansion Project to increase the capacity to transport natural gas in their
existing system in Mississippi, Alabama and Georgia; the Trans-Union Interstate
Pipeline Project to transport natural gas from Louisiana to a planned power
plant in Arkansas; the Caballero Pipeline Project to transport natural gas from
producing areas in northeastern New Mexico to a connecting pipeline in the Texas
panhandle; and the Centennial Pipeline Project to convert an existing natural
gas pipeline to transport refined petroleum products from the U.S. Gulf Coast to
the Midwest United States.
Willbros has also provided significant engineering services to the U.S.
Government during the past 15 years, particularly in fuel storage and
distribution systems and aircraft fueling facilities. Currently, the Company
owns and operates two fueling facilities at Ft. Bragg, North Carolina, which
were constructed in 1998 by the Company. The Company completed a similar
facility in 2000 at Twenty-nine Palms Marine Corps Base in California.
On January 24, 2000, the Company acquired Rogers & Phillips, Inc., a
closely held pipeline construction company in Houston, Texas, with an
experienced management team and a strong market position in the U.S. Gulf Coast
area.
The Company's backlog in North America was $106.7 million at December 31,
2000, compared to $30.8 million at December 31, 1999.
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South America
Willbros' first entry into South America was in Venezuela in 1939. Recent
developments involving political changes and privatization efforts in many of
the South American countries make this region attractive to the Company. In
particular, privatization and deregulation in this region are allowing more
foreign and domestic private investment in the energy sector which, until
recently, had traditionally been controlled by state-owned energy companies. In
Argentina, Bolivia, Brazil, Chile and Peru, gas transportation projects will
continue to evolve to meet increasing demand for gas for industrial and power
usage in the rapidly growing urban areas. In Venezuela, Colombia and Ecuador,
crude oil transportation systems will need to be built and upgraded so that the
vast crude reserves in these countries can be efficiently exported to the world
market. The Company is aggressively pursuing business opportunities throughout
South America and currently bidding work or monitoring prospects in Argentina,
Bolivia, Brazil, Colombia, Ecuador, Peru and Venezuela.
Willbros has performed numerous major projects in South America, where its
accomplishments include the construction of five major pipeline crossings of the
Andes Mountains and setting a world altitude record for constructing a pipeline.
Willbros' largest project in South America was a turnkey project for the
procurement and construction of the Alto Magdalena Crude Oil Pipeline System in
Colombia, awarded to Willbros in 1989 and completed in 1990.
Venezuela is the largest oil producer in South America. With conservative
estimates of proven reserves of more than 72 billion barrels of oil, PDVSA's
plans for the future include an increase in oil production from its current
level of approximately 3.0 million barrels per day to approximately 6.0 million
barrels per day by 2006.
In Venezuela, the Company maintains a fully staffed facility including
offices, equipment, yard and dock facilities on a 15-acre waterfront site on
Lake Maracaibo. Resident personnel provide services for both onshore and
offshore projects. Services include pipeline construction, repair and
maintenance services, fabrication and installation of concrete piles and
platforms, marine related services, engineering support and other needed
services. Major clients include international oil companies such as Shell,
Occidental Petroleum, Chevron and operating subsidiaries of PDVSA, including
Maraven, Corpoven and Lagoven. In 1998, the Company successfully completed a
contract to construct 120 miles (200 kilometers) each of 36- and 20-inch
pipelines originating from the Zuata Region of the Orinoco Belt for Petrozuata,
a joint venture between Conoco and Maraven. Also during 1998, a consortium in
which the Company holds a 10 percent equity interest was awarded a 16-year
contract valued at $785.0 million to operate, maintain and refurbish the Lake
Maracaibo water injection program for PDVSA Gas. In 2000, the Company completed
the construction of a major crude oil, pumping station for Petrozuata. Current
activities include operating, maintenance and refurbishment services for the
above-mentioned consortium and recurring service and maintenance work for
various clients.
The Company's backlog in South America was $29.7 million at December 31,
2000, compared to $41.1 million at December 31, 1999.
BACKLOG
The Company's backlog (anticipated revenue from the uncompleted portions of
existing contracts and contracts whose award is reasonably assured) was $373.9
million at December 31, 2000, compared to $253.1 million at December 31, 1999.
The Company believes the backlog figures are firm, subject only to the
cancellation and modification provisions contained in various contracts. It is
expected that approximately $178 million (48%) of the backlog existing at
December 31, 2000, will be recognized in revenue during 2001. Historically, a
substantial amount of the Company's revenue in a given year has not been
reflected in its backlog at the beginning of that year; such revenue may result
from contracts of long or short duration entered into during a year as well as
from various contractual processes, including change orders, extra work,
variations in the scope of work and the effect of escalation or currency
fluctuation formulas. These revenue sources are not added to backlog until
realization is assured.
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The following is a breakdown of the Company's backlog by geographic region
as of December 31, 2000 and 1999:
2000 1999
--------------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- -------- -------- --------
(DOLLAR AMOUNTS IN THOUSANDS)
Africa .................. $230,838 62% $150,262 59%
North America ........... 106,728 28 30,768 12
South America ........... 29,670 8 41,138 16
Middle East ............. 6,711 2 11,032 5
Asia and Australia ...... -- -- 19,880 8
-------- -------- -------- --------
Total .............. $373,947 100% $253,080 100%
======== ======== ======== ========
The $120.9 million (48%) increase in backlog is due mainly to the addition
of the Chad-Cameroon Pipeline Project and U.S. engineering and construction
contracts, offset by work performed on the engineering procurement and
construction of the Nembe Creek gas gathering projects in Nigeria, a three-year
dredging contract in Nigeria, the construction and installation of five concrete
water injection platforms in Venezuela, completion of the project in Australia
and a mechanical service contract in Oman.
A substantial percentage of the Company's revenue in past years resulted
from contracts entered into during that year or the immediately preceding year.
The following table sets forth revenue for each of the last five years as a
percentage of backlog at the beginning of each such year:
REVENUE FOR
BACKLOG AT YEAR ENDED
JANUARY 1 DECEMBER 31 PERCENT
---------- ----------- -------
(DOLLAR AMOUNTS IN THOUSANDS)
1996 .......... $139,359 $197,688 142%
1997 .......... 108,751 251,877 231
1998 .......... 135,797 281,618 207
1999 .......... 286,473 176,564 61
2000 .......... 253,080 314,290 124
No assurance can be given that future experience will be similar to historical
results in this respect.
COMPETITION
The Company operates in a highly competitive environment. The Company
competes against government-owned or supported companies and other companies
that have financial and other resources substantially in excess of those
available to the Company. In certain markets, there is competition from national
and regional firms against which the Company may not be price competitive.
The Company's primary competitors on construction projects in developing
countries include Entrepose (France), Mannesmann (Germany), CCC (Lebanon),
Nippon Kokan (Japan), Saipem (Italy), Spie-Capag (France), Techint (Argentina)
and Bechtel (U.S.). The Company believes that it is one of the few companies
among its competitors possessing the ability to carry out large projects in
developing countries on a turnkey basis (engineering, procurement and
construction), without subcontracting major elements of the work. As a result,
the Company may be more cost effective than its competitors in certain
instances.
The Company has different competitors in different markets. In Nigeria, the
Company competes for pipe coating work with Bredero Price (Netherlands), while
its dredging competitors include Bos Kalis Westminster (Netherlands), Dredging
International (Belgium), Bilfinger + Berger (Germany), Nigerian Dredging &
Marine (Netherlands) and Ham Dredging (Netherlands). In Oman, competitors in oil
field
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transport services include Desert Line, Al Ahram, Hamdam and TruckOman, all
Omani companies; and in construction and the installation of flowlines and
mechanical services, the Company competes with Taylor Woodrow Towell (Britain),
CCC (Lebanon), Dodsal (India), Saipem (Italy), Desert Line (Oman) and Galfar
(Oman). In Venezuela, competitors in marine support services include Raymond de
Venezuela, Petrolago, Flag Instalaciones and Siemogas, all Venezuelan companies.
In Indonesia, major competitors include Saipem (Italy), Spie-Capag (France),
McConnell Dowell (Australia) and Mannesmann (Germany).
In the United States, the Company's primary construction competitors on a
national basis include Associated, Gregory & Cook, Henkels & McCoy, Murphy
Brothers, H. C. Price, Sheehan and Welded. In addition, there are a number of
regional competitors. Primary competitors for engineering services include
Bechtel, Brown and Root, Gulf Interstate, Marmac, Fluor Daniel Williams
Brothers, Mustang Engineering, Stone & Webster, Paragon Engineering, Trigon
Engineering and Universal Ensco.
CONTRACT PROVISIONS AND SUBCONTRACTING
Most of the Company's revenues are derived from construction, engineering
and specialty services contracts. The Company enters into four basic types of
construction contracts: (a) firm fixed-price or lump sum fixed-price contracts
providing for a single price for the total amount of work or for a number of
fixed lump sums for the various work elements comprising the total price; (b)
unit-price contracts which specify a price for each unit of work performed; (c)
time and materials contracts under which personnel and equipment are provided
under an agreed schedule of daily rates with other direct costs being
reimbursable; and (d) a combination of the above (for example, lump sums for
certain items and unit rates for others).
The Company enters into three types of engineering contracts: firm
fixed-price or lump sum fixed-price contracts; time and materials contracts
pursuant to which engineering services are provided under an agreed schedule of
hourly rates for different categories of personnel, and materials and other
direct costs are reimbursable; and cost-plus-fee contracts, common with U.S.
government clients under which income is earned solely from the fee received.
Cost-plus-fee contracts are often used for material procurement services.
Specialty services contracts generally are unit-price contracts, which
specify a price payable per unit of work performed (e.g., per cubic meter, per
lineal meter, etc.). Such contracts usually include hourly rates for various
categories of personnel and equipment to be applied in cases where no unit price
exists for a particular work element. Under a services contract, the client is
typically responsible for supplying all materials; a cost-plus-percentage-fee
provision is generally included in the contract to enable the client to direct
the contractor to furnish certain materials.
The Company usually obtains contracts through competitive bidding or
through negotiations with long-standing clients. The Company is typically
invited to bid on projects undertaken by its clients who maintain approved
bidder lists. Bidders are pre-qualified by virtue of their prior performance for
such clients, as well as their experience, reputation for quality, safety
record, financial strength and bonding capacity.
In evaluating bid opportunities, the Company considers such factors as the
client, the geographic location and the difficulty of the work, the Company's
current and projected workload, the likelihood of additional work, the project's
cost and profitability estimates, and the Company's competitive advantage
relative to other likely bidders. The Company uses a computer-based estimating
system. The bid estimate forms the basis of a project budget against which
performance is tracked through a project control system, enabling management to
monitor projects effectively. Project costs are accumulated weekly and monitored
against billings and payments to facilitate cash flow management on the project.
All U.S. government contracts and many of the Company's other contracts
provide for termination of the contract for the convenience of the client. In
addition, many contracts are subject to certain completion schedule requirements
that include liquidated damages in the event schedules are not met as the result
of circumstances within the control of Willbros.
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The Company acts as prime contractor on a majority of the construction
projects it undertakes. In its capacity as prime contractor and when acting as a
subcontractor, the Company performs most of the work on its projects with its
own resources and typically subcontracts only such specialized activities as
hazardous waste removal, non-destructive inspection, tank erection, catering and
security. In the construction industry, the prime contractor is normally
responsible for the performance of the entire contract, including subcontract
work. Thus, when acting as a prime contractor, the Company is subject to the
risk associated with the failure of one or more subcontractors to perform as
anticipated.
EMPLOYEES
The Company believes its employees are its most valuable asset and that
their loyalty, productivity, pioneering spirit, work ethic and strong commitment
in providing quality services have been crucial elements in the successes
Willbros has achieved on numerous projects in remote, logistically challenging
locations around the world.
At December 31, 2000, the Company employed a multi-national work force of
approximately 2,200 persons, of which over 80% are citizens of the respective
countries in which they work. Although the level of activity varies from year to
year, Willbros has maintained an average work force of approximately 3,290 over
the past five years. The minimum employment during that period has been 2,010
and the maximum 4,750. At December 31, 2000, approximately 56 percent of the
Company's employees were covered by collective bargaining agreements. The
Company believes its relations with its employees are good.
The following table sets forth the location of employees by work countries
as of December 31, 2000:
NUMBER OF
EMPLOYEES PERCENT
--------- -------
Nigeria...................................................................... 1,177 54%
Oman ........................................................................ 401 18
Venezuela.................................................................... 180 8
U.S. Engineering............................................................. 247 11
U.S. Construction............................................................ 120 6
U.S. Administration.......................................................... 65 3
Other Countries.............................................................. 4 -
----- ---
2,194 100%
===== ===
EQUIPMENT
The Company owns and maintains a fleet of generally standardized
construction, transportation and support equipment and spare parts. In 2000 and
1999, expenditures for capital equipment and spare parts were $15.4 million and
$12.2 million, respectively. At December 31, 2000, the Company's net book value
of property, plant, equipment and spare parts was $62.6 million. An estimated
breakdown of the Company's major capital equipment at March 12, 2001, is as
follows: heavy construction equipment, 625 units; transportation equipment, 843
units; and support equipment, 5,025 units. During 2000, surplus equipment with a
net book value of $5.3 million was sold for approximately $5.3 million.
Historically, the Company has preferred to own rather than lease equipment
to ensure that standardized equipment is available as needed. The Company
believes that ownership of standardized equipment has resulted in lower
equipment costs. However, depending on market conditions, the availability of
equipment and other considerations, the Company may from time to time pursue the
leasing of equipment to support projects and may dispose of surplus equipment.
The Company attempts to obtain projects that will keep its equipment fully
utilized in order to increase profitability. All equipment is subject to
scheduled maintenance to maximize fleet readiness. The Company has maintenance
facilities at Port Harcourt, Nigeria; Azaiba, Oman; Maracaibo, Venezuela; and
Broken Arrow, Oklahoma; as well as temporary site facilities on major jobs to
minimize downtime.
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FACILITIES
The Company owns a 14-acre equipment yard/maintenance facility and an
adjoining 29-acre undeveloped industrial site at Broken Arrow, Oklahoma, a short
distance from Tulsa, Oklahoma. In Venezuela, the Company's offices and
construction facilities are located on 15 acres of land, which it owns, on the
shores of Lake Maracaibo. The Company leases all other facilities used in its
operations, including corporate offices in Panama; administrative and
engineering offices in Tulsa, Oklahoma, and Houston, Texas; and various office
facilities, equipment sites and expatriate housing units in Abu Dhabi, England,
Nigeria, Oman, Egypt, Kuwait and Indonesia. Rent expense for these facilities
was $3.2 million in 2000 and $2.3 million in 1999.
INSURANCE AND BONDING
The Company maintains workers' compensation, employers' liability, general
liability, directors' and officers' liability, automobile liability, aircraft
liability, marine liability and excess liability insurance to provide benefits
to employees and to protect the Company against claims by third parties. Such
insurance is underwritten by A+ or better rated insurance companies (AM Best
rating as to claims paying ability) and, when possible, in loss-sensitive plans
with return premiums for favorable loss experience. The Company also maintains
physical damage insurance covering loss of or damage to Company property on a
worldwide basis, with special insurance covering loss or damage caused by
political or terrorist risks in locations where such coverage is deemed prudent.
Formal risk management and safety programs are maintained, which have resulted
in favorable loss ratios and cost savings. The Company believes its risk
management, safety and insurance programs are adequate to meet its needs.
The Company is often required to provide surety bonds guaranteeing its
performance and/or financial obligations. The amount of bonding available to the
Company depends upon its experience and reputation in the industry, financial
condition, backlog and management expertise, among other factors. The Company
maintains relationships with two top-rated surety companies to provide surety
bonds.
POLITICAL AND ECONOMIC RISKS; OPERATIONAL RISKS
The Company currently has substantial operations and assets in developing
countries in Africa, the Middle East and South America. Accordingly, the Company
is subject to risks which ordinarily would not be expected to exist in the
United States, Canada, Japan or western Europe. Some of these risks include
foreign currency restrictions (such as those which existed in Venezuela until
1996), extreme exchange rate fluctuations (for example, in Venezuela and
Nigeria), expropriation of assets, civil uprisings and riots, availability of
suitable personnel and equipment, government instability and legal systems of
decrees, laws, regulations, interpretations and court decisions which are not
always fully developed and which may be retroactively applied. The Company's
operations in developing countries may be adversely affected in the event any
governmental agencies in these countries interpret laws, regulations or court
decisions in a manner which might be considered inconsistent or inequitable in
the United States, Canada, Japan or western Europe. The Company may be subject
to unanticipated taxes including income taxes, excise duties, import taxes,
export taxes, sales taxes, or other governmental assessments, which could have a
material adverse effect on the Company's results of operations for any quarter
or year.
Given the unpredictable nature of the risks described in the preceding
paragraph, there can be no assurance that such risks will not result in a loss
of business which could have a material adverse effect on the Company's results
of operations. The Company has attempted to mitigate the risks of doing business
in developing countries by separately incorporating its operations in many such
countries; working with local partners in certain countries; contracting
whenever possible with major international oil and gas companies; obtaining
sizeable down payments or securing payment guarantees; entering into contracts
providing for payment in U.S. dollars instead of the local currency whenever
possible; maintaining reserves for credit losses; maintaining insurance on
equipment against certain political risks
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and terrorism; and limiting its capital investment in each country. The Company
retains local advisors to assist it in interpreting the laws, practices and
customs of the countries in which the Company operates.
From time to time, international oil companies operating in Nigeria,
including Royal Dutch Shell, have expressed concern over the Nigerian
government's tardiness in meeting its payment obligations and have threatened to
reduce their planned investments, and/or cut production, in Nigeria. In
addition, indecision by the Nigerian government over agreeing to budget
expenditure plans for oil companies involved in joint ventures with the Nigerian
National Petroleum Corporation may also lead these companies to curtail their
planned investments in Nigeria. Any such reduction in the level of investment or
production could reduce the amount of contract work awarded in Nigeria, which
could have a material adverse effect on the Company and its results of
operations. The Company cannot predict whether any such actions will be taken in
the future and, if taken, the extent to which such actions would impact current
or future prospects of the Company in Nigeria.
In 1999, local protesters looted and vandalized a Company facility near
Port Harcourt, Nigeria, and interfered with the Company's operations and
progress on some ongoing projects. The Nigerian government intervened and
restored order in the area. In 2000, there were periodic interruptions on some
projects. The Company has successfully operated in Nigeria for the past 38 years
with very favorable relationships with the local communities, and believes that
order can be maintained and that it can continue to operate in the area.
Due to the limited number of major projects worldwide, the Company may, at
any one time, have a substantial portion of its resources dedicated to one
country. The Company's results of operations are, therefore, susceptible to
adverse events beyond its control, which may occur in a particular country in
which the Company's business may be concentrated.
The Company's operations include pipeline construction, dredging, pipeline
rehabilitation services, marine support services and the operation of vessels
and heavy equipment. These operations involve a high degree of operational risk.
Natural disasters, adverse weather conditions, collisions, and operator or
navigational error could cause personal injury or loss of life, severe damage to
and destruction of property, equipment and the environment and suspension of
operations. In locations where the Company performs work with equipment that is
owned by others, the continued use of the equipment can be subject to unexpected
or arbitrary interruption or termination. The occurrence of any of these events
could result in work stoppage, loss of revenue, casualty loss, increased costs
and significant liability to third parties. Litigation arising from the
occurrence of any of these events could result in the Company being named as a
defendant in lawsuits asserting substantial claims.
The Company maintains risk management and safety programs to mitigate the
effects of loss or damage. While the Company maintains such insurance protection
as it deems prudent, there can be no assurance that any such insurance will be
sufficient or effective under all circumstances or against all hazards to which
the Company may be subject. An enforceable claim for which the Company is not
fully insured could have a material adverse effect on the Company. Moreover, no
assurance can be given that the Company will be able to maintain adequate
insurance in the future at rates that it considers reasonable.
GOVERNMENT REGULATIONS
General
Many aspects of the Company's operations are subject to government
regulations in the countries in which the Company operates, including those
relating to currency conversion and repatriation, taxation of its earnings and
earnings of its personnel, and its use of local employees and suppliers. In
addition, the Company depends on the demand for its services from the oil, gas
and power industries and, therefore, is affected by changing taxes, price
controls and laws and regulations relating to the oil, gas and power industries
generally. The ability of the Organization of Petroleum Exporting Countries to
meet and maintain production targets also influences the demand for the
Company's services. The adoption of laws and regulations by countries in which
the Company operates, curtailing exploration and development
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drilling for oil and gas for economic and other policy reasons, could adversely
affect the Company's operations by limiting demand for its services. The
Company's operations are also subject to the risk of changes in foreign and U.S.
laws and policies which may impose restrictions on the Company, including trade
restrictions, which could have a material adverse effect on the Company's
operations. Other types of government regulation which could, if enacted or
implemented, adversely affect the Company's operations include expropriation or
nationalization decrees, confiscatory tax systems, primary or secondary boycotts
directed at specific countries or companies, embargoes, extensive import
restrictions or other trade barriers, mandatory sourcing rules and
unrealistically high labor rate and fuel price regulation. The Company cannot
determine to what extent future operations and earnings of the Company may be
affected by new legislation, new regulations or changes in, or new
interpretations of, existing regulations.
Environmental
The Company's operations are subject to numerous environmental protection
laws and regulations, which are complex and stringent. The Company regularly
works in and around sensitive environmental areas such as rivers, lakes and
wetlands. Significant fines and penalties may be imposed for non-compliance with
environmental laws and regulations, and certain environmental laws provide for
joint and several strict liability for remediation of releases of hazardous
substances, rendering a person liable for environmental damage without regard to
negligence or fault on the part of such person. In addition to potential
liabilities that may be incurred in satisfying these requirements, the Company
may be subject to claims alleging personal injury or property damage as a result
of alleged exposure to hazardous substances. Such laws and regulations may
expose the Company to liability arising out of the conduct of operations or
conditions caused by others, or for the acts of the Company which were in
compliance with all applicable laws at the time such acts were performed. The
Company is not aware of any non-compliance with or liability under any
environmental law that could have a material adverse effect on the Company's
business or operations.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a number of legal proceedings. The Company
believes that the nature and number of these proceedings are typical for a firm
of its size engaged in the Company's type of business and that none of these
proceedings is material to the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of 2000 through the solicitation of proxies or otherwise.
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ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers and key personnel of the Company. Officers are elected annually by, and
serve at the discretion of, the Board of Directors.
NAME AGE POSITION
---- --- --------
Larry J. Bump.................... 61 Director, Chairman of the Board of Directors
and Chief Executive Officer
Michael F. Curran................ 60 Director, Vice Chairman of the Board of Directors,
President and Chief Operating Officer
Melvin F. Spreitzer.............. 62 Director, Executive Vice President, Chief
Financial Officer and Treasurer
James R. Beasley................. 58 President of Willbros Engineers, Inc.
John N. Hove..................... 53 General Counsel and Secretary
John K. Allcorn.................. 39 Senior Vice President of Willbros International, Inc.
Warren L. Williams............... 45 Vice President of Willbros USA, Inc.
William R. Phillips.............. 50 President and Chief Executive Officer of Rogers & Phillips, Inc.
Arthur J. West................... 57 Managing Director of Willbros (Overseas) Limited
Latif A. Razek................... 54 General Manager of The Oman Construction Company, LLC
J.B. Brown....................... 38 General Manager of Constructora CAMSA, C.A.
J. K. Tillery.................... 42 Managing Director of Willbros (Nigeria) Limited
LARRY J. BUMP joined Willbros in 1977 as President and Chief Operating
Officer and was elected to the Board of Directors. He was named Chief Executive
Officer in 1980 and elected Chairman of the Board of Directors in 1981. His
41-year career includes significant U.S. and international pipeline construction
and management experience. Prior to joining Willbros, he managed major
international projects in North Africa and the Middle East, and was Chief
Executive Officer of a major international pipeline construction company. From
1985 until mid-1988, he also served as Chief Executive Officer of a major
international marine engineering and construction company, which at that time
was the controlling shareholder of Willbros.
MICHAEL F. CURRAN joined Willbros in 2000 as a Director, Vice Chairman of
the Board of Directors, President and Chief Operating Officer. Mr. Curran has
over 39 years of diversified experience in pipeline construction around the
world, including 30 years as President and Chief Executive Officer of various
U.S. and international pipeline construction firms.
MELVIN F. SPREITZER joined Willbros in 1974 as Controller and was elected
Vice President of Finance in 1978. He was elected Executive Vice President,
Chief Financial Officer and Treasurer in 1987, and a Director in 1992. He has
over 44 years of experience in corporate finance and public accounting.
JAMES R. BEASLEY joined Willbros in 1981 when Willbros Engineers, Inc.
("WEI") was acquired. He was elected Vice President of WEI in 1981, Senior Vice
President and General Manager of WEI in 1982 and President of WEI in 1986. Mr.
Beasley has more than 30 years of experience in pipeline engineering and
operations.
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JOHN N. HOVE became General Counsel of Willbros in 1991. He was elected
Secretary of Willbros in 1996. He has more than 29 years of experience as a
lawyer and has provided legal assistance to Willbros since 1973. Prior to 1991,
he was a shareholder in a law firm in Tulsa, Oklahoma, where he concentrated his
practice on international business transactions.
JOHN K. ALLCORN joined Willbros in 2000 as Senior Vice President of
Willbros International, Inc. He was previously Executive Vice President of a
major U.S. pipeline construction firm and has over 15 years of pipeline industry
experience including an established record in operations management, finance and
business development.
WARREN L. WILLIAMS joined Willbros in 2000 as Vice President, Finance and
Accounting, of Willbros USA, Inc. Mr. Williams has over 22 years of experience
in corporate finance and public accounting.
WILLIAM R. PHILLIPS joined Willbros in 2000 when Rogers & Phillips, Inc.
("RPI") was acquired. He was elected Vice President of RPI in 1992, and
President and Chief Executive Officer of RPI in 1997. Mr. Phillips has more than
27 years of experience in pipeline construction.
ARTHUR J. WEST joined Willbros in 1962 in North Africa. In 1988, he became
Vice President of Willbros Middle East, Inc. ("WMEI") and, in 1992, he was
elected Vice President of Willbros International, Inc. and became responsible
for business development and operations for WMEI in the Middle East. Mr. West
has over 35 years of experience in pipeline construction in the areas of
administrative and project management.
LATIF A. RAZEK joined Willbros in 1973 and was promoted to General Manager
of The Oman Construction Company, L.L.C. in 1999. He has over 28 years of
experience in the pipeline construction industry.
J.B. BROWN joined Willbros in 1984 as a field engineer. He has over 16
years of experience as an Engineer and Project Manager working in Colombia, Oman
and Nigeria. In 2000, he was named General Manager of Constructora CAMSA, C.A.
in Venezuela.
J. K. TILLERY joined Willbros in 1983 as a field engineer. He has over 20
years of experience as an Engineer and Project Manager working in both U.S. and
international pipeline construction. In 1995, he was named Managing Director of
Willbros (Nigeria) Limited.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated by reference from (a)
the section on page 43 of the Company's 2000 Annual Report to Stockholders
entitled "Common Stock Information and Dividend Policy" and (b) the section on
pages 22 and 23 of the Company's 2000 Annual Report to Stockholders entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Capital Structure, Liquidity and Capital Resources".
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated by reference from
page 16 of the Company's 2000 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item is incorporated by reference from
pages 17 through 23 of the Company's 2000 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is incorporated by reference from
page 23 of the Company's 2000 Annual Report to Stockholders entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Financial Risk Management".
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated by reference from
pages 24 through 42 of the Company's 2000 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to the Company's
directors is incorporated by reference from the sections of the Company's
definitive Proxy Statement for its 2001 Annual Meeting of Stockholders (the
"Proxy Statement") entitled "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance". The information required by this
Item with respect to the Company's executive officers appears in Item 4A of Part
I of this Form 10-K.
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ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from the
section of the Proxy Statement entitled "Executive Compensation".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference from the
section of the Proxy Statement entitled "Principal Stockholders and Security
Ownership of Management".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference from the
section of the Proxy Statement entitled "Certain Transactions".
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements:
The financial statements of the Company and its subsidiaries and report of
independent auditors listed below are incorporated by reference from the
following pages of the Company's 2000 Annual Report to Stockholders:
2000
Annual Report
Page(s)
-------------
Independent Auditor's Report............................................................. 24
Consolidated Balance Sheets as of December 31, 2000 and 1999............................. 25
Consolidated Statements of Operations for the years ended
December 31, 2000, 1999 and 1998................................................... 26
Consolidated Statements of Stockholders' Equity and Comprehensive Income
for the years ended December 31, 2000, 1999 and 1998............................... 27
Consolidated Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998................................................... 28
Notes to Consolidated Financial Statements............................................... 29-42
2000
Form 10-K
Page(s)
---------
(2) Financial Statement Schedule:
Independent Auditors' Report............................................................. 31
Schedule II - Consolidated Valuation and Qualifying Accounts............................. 32
All other schedules are omitted as inapplicable or because the required
information is contained in the financial statements or included in the
footnotes thereto.
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(3) Exhibits:
The following documents are included as exhibits to this Form 10-K. Those
exhibits below incorporated by reference herein are indicated as such by the
information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.
3.1 Amended and Restated Articles of Incorporation of the Company (Filed as
Exhibit 3.2 to the Company's report on Form 10-Q for the quarter ended
September 30, 1998, filed November 16, 1998).
3.2 Restated By-laws of the Company (Filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1, Registration No. 333-5413 (the "S-1
Registration Statement")).
4.1 Form of stock certificate for the Company's Common Stock, par value $.05
per share (Filed as Exhibit 4 to the S-1 Registration Statement).
4.2 Rights Agreement, dated April 1, 1999, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (Filed as an
Exhibit to the Company's Registration Statement on Form 8-A, dated April
9, 1999).
4.3 Certificate of Designation of Series A Junior Participating Preferred
Stock of the Company (Filed as Exhibit 3 to the Company's report on Form
10-Q for the quarter ended March 31, 1999, filed May 17, 1999).
10.1 Credit Agreement dated February 20, 1997, by and among the Company,
certain designated subsidiaries, Credit Lyonnais New York Branch, as
co-agent, certain financial institutions, and ABN AMRO Bank N.V., as
agent (Filed as Exhibit 10.1 to the Company's report on Form 10-K for the
year ended December 31, 1996, filed March 31, 1997 (the "1996 Form
10-K")).
10.2 Parent Pledge Agreement dated February 20, 1997, by the Company, in favor
of ABN AMRO Bank N.V., as agent (Filed as Exhibit 10.2 to the 1996 Form
10-K).
10.3 Pledge Agreement dated February 20, 1997, by Musketeer Oil B.V., in favor
of ABN AMRO Bank N.V., as agent (Filed as Exhibit 10.3 to the 1996 Form
10-K).
10.4 Pledge Agreement dated February 20, 1997, by Willbros USA, Inc., in favor
of ABN AMRO Bank N.V., as agent (Filed as Exhibit 10.4 to the 1996 Form
10-K).
10.5* Form of Indemnification Agreement between the Company and its officers
(Filed as Exhibit 10.7 to the S-1 Registration Statement).
10.6* Form of Indemnification Agreement between the Company and its directors
(Filed as Exhibit 10.16 to the S-1 Registration Statement).
10.7* Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.8 to the S-1
Registration Statement).
10.8* Amendment Number 1 to Willbros Group, Inc. 1996 Stock Plan dated February
24, 1999 (Filed as Exhibit A to the Company's Proxy Statement for Annual
Meeting of Stockholders dated March 31, 1999).
10.9* Form of Incentive Stock Option Agreement under the Willbros Group, Inc.
1996 Stock Plan (Filed as Exhibit 10.13 to the 1996 Form 10-K).
10.10* Form of Non-Qualified Stock Option Agreement under the Willbros Group,
Inc. 1996 Stock Plan (Filed as Exhibit 10.14 to the 1996 Form 10-K).
10.11* Willbros Group, Inc. Director Stock Plan (Filed as Exhibit 10.9 to the
S-1 Registration Statement).
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10.12* Willbros USA, Inc. Executive Benefit Restoration Plan (Filed as Exhibit
10.10 to the S-1 Registration Statement).
10.13 Registration Rights Agreement dated April 9, 1992, between the Company
and Heerema Holding Construction, Inc., Yorktown Energy Partners, L.P.,
Concord Partners II, L.P., Concord Partners Japan Limited and certain
other stockholders of the Company (Filed as Exhibit 10.13 to the S-1
Registration Statement).
10.14* Willbros Group, Inc. Severance Plan dated January 1, 1999 (Filed as
Exhibit 10.22 to the Company's report on Form 10-K for the year ended
December 31, 1998, filed March 31, 1999 (the "1998 Form 10-K")).
10.15 First Amendment to Credit Agreement dated April 2, 1998, by and among the
Company, certain designated subsidiaries, Credit Lyonnais New York
Branch, as co-agent, certain financial institutions, and ABN AMRO Bank
N.V., as agent (Filed as Exhibit 10.25 to the 1998 Form 10-K).
10.16 Second Amendment to Credit Agreement dated October 1, 1998, by and among
the Company, certain designated subsidiaries, Credit Lyonnais New York
Branch, as co-agent, certain financial institutions, and ABN AMRO Bank
N.V., as agent (Filed as Exhibit 10.26 to the 1998 Form 10-K).
10.17 Third Amendment to Credit Agreement effective June 30, 2000, by and among
the Company, certain designated subsidiaries, Credit Lyonnais New York
Branch, as co-agent, certain financial institutions, and ABN AMRO Bank
N.V., as agent (Filed as Exhibit 10.1 to the Company's report on Form
10-Q for the quarter ended June 30, 2000, filed August 14, 2000).
10.18 Security Agreement effective July 27, 2000, by and among the Company,
certain designated subsidiaries, and ABN AMRO Bank N.V., as agent (Filed
as Exhibit 10.2 to the Company's report on Form 10-Q for the quarter
ended June 30, 2000, filed August 14, 2000).
10.19 Fourth Amendment to Credit Agreement effective June 30, 2000, by and
among the Company, certain designated subsidiaries, Credit Lyonnais New
York Branch, as co-agent, certain financial institutions, and ABN AMRO
Bank N.V., as agent (Filed as Exhibit 10.3 to the Company's report on
Form 10-Q for the quarter ended June 30, 2000, filed August 14, 2000).
13. Portions of the Company's 2000 Annual Report to Stockholders.
21. Subsidiaries of the Company.
23. Consent of KPMG LLP, included on page 31 of this Form 10-K.
----------
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 2000.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WILLBROS GROUP, INC.
Date: March 29, 2001 By: /s/ Larry J. Bump
----------------------------------
Larry J. Bump
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Larry J. Bump Director, Chairman of the Board and March 29, 2001
-------------------------------------- Chief Executive Officer
Larry J. Bump (Principal Executive Officer)
/s/ Michael F. Curran Director, Vice Chairman of the Board, March 29, 2001
-------------------------------------- President and Chief Operating Officer
Michael F. Curran
/s/ Melvin F. Spreitzer Director, Executive Vice President, March 29, 2001
-------------------------------------- Chief Financial Officer and Treasurer
Melvin F. Spreitzer (Principal Financial Officer and Principal
Accounting Officer)
/s/ Guy E. Waldvogel Director March 29, 2001
--------------------------------------
Guy E. Waldvogel
/s/ Peter A. Leidel Director March 29, 2001
--------------------------------------
Peter A. Leidel
/s/ John H. Williams Director March 29, 2001
--------------------------------------
John H. Williams
/s/ Michael J. Pink Director March 29, 2001
--------------------------------------
Michael J. Pink
/s/ James B. Taylor, Jr. Director March 29, 2001
--------------------------------------
James B. Taylor, Jr.
30
31
INDEPENDENT AUDITORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
AND CONSENT
The Stockholders and Board of Directors
Willbros Group, Inc.:
The audits referred to in our report dated February 9, 2001 included the
related consolidated financial statement schedule for each of the years in the
three-year period ended December 31, 2000. This consolidated financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on the consolidated financial statement schedule based
on our audits. In our opinion, such consolidated financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
We consent to the incorporation by reference in the registration
statements (Nos. 333-18421, 333-21399 and 333-53748) on Form S-8 and (No.
333-96201) on Form S-3 of Willbros Group, Inc. of our reports dated February 9,
2001, relating to the consolidated balance sheets of Willbros Group, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statement of operations, stockholders' equity and comprehensive income and cash
flows for each of the years in the three-year period ended December 31, 2000 and
the related financial statement schedule, which reports appear in the December
31, 2000 annual report on Form 10-K of Willbros Group, Inc.
KPMG LLP
Houston, Texas
March 29, 2001
31
32
WILLBROS GROUP, INC.
SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Charged
(Credited)
Balance at to Costs Charge Balance
Beginning and Offs and at End
Year Ended Description of Year Expenses Other of Year
---------- ----------------------- ---------- ---------- --------- ---------
December 31, 1998 Allowance for bad debts $1,001 $ 72 $ (85) $ 988
December 31, 1999 Allowance for bad debts $ 988 $ 573 $(294) $1,267
December 31, 2000 Allowance for bad debts $1,267 $(154) $(605) $ 508
32
33
INDEX TO EXHIBITS
The following documents are included as exhibits to this Form 10-K. Those
exhibits below incorporated by reference herein are indicated as such by the
information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.
Exhibit
Number Description
------ -----------
3.1 Amended and Restated Articles of Incorporation of the Company (Filed as
Exhibit 3.2 to the Company's report on Form 10-Q for the quarter ended
September 30, 1998, filed November 16, 1998).
3.2 Restated By-laws of the Company (Filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1, Registration No. 333-5413 (the "S-1
Registration Statement")).
4.1 Form of stock certificate for the Company's Common Stock, par value $.05
per share (Filed as Exhibit 4 to the S-1 Registration Statement).
4.2 Rights Agreement, dated April 1, 1999, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (Filed as an
Exhibit to the Company's Registration Statement on Form 8-A, dated April
9, 1999).
4.3 Certificate of Designation of Series A Junior Participating Preferred
Stock of the Company (Filed as Exhibit 3 to the Company's report on Form
10-Q for the quarter ended March 31, 1999, filed May 17, 1999).
10.1 Credit Agreement dated February 20, 1997, by and among the Company,
certain designated subsidiaries, Credit Lyonnais New York Branch, as
co-agent, certain financial institutions, and ABN AMRO Bank N.V., as
agent (Filed as Exhibit 10.1 to the Company's report on Form 10-K for
the year ended December 31, 1996, filed March 31, 1997 (the "1996 Form
10-K")).
10.2 Parent Pledge Agreement dated February 20, 1997, by the Company, in
favor of ABN AMRO Bank N.V., as agent (Filed as Exhibit 10.2 to the 1996
Form 10-K).
10.3 Pledge Agreement dated February 20, 1997, by Musketeer Oil B.V., in
favor of ABN AMRO Bank N.V., as agent (Filed as Exhibit 10.3 to the 1996
Form 10-K).
10.4 Pledge Agreement dated February 20, 1997, by Willbros USA, Inc., in
favor of ABN AMRO Bank N.V., as agent (Filed as Exhibit 10.4 to the 1996
Form 10-K).
10.5* Form of Indemnification Agreement between the Company and its officers
(Filed as Exhibit 10.7 to the S-1 Registration Statement).
10.6* Form of Indemnification Agreement between the Company and its directors
(Filed as Exhibit 10.16 to the S-1 Registration Statement).
10.7* Willbros Group, Inc. 1996 Stock Plan (Filed as Exhibit 10.8 to the S-1
Registration Statement).
10.8* Amendment Number 1 to Willbros Group, Inc. 1996 Stock Plan dated
February 24, 1999 (Filed as Exhibit A to the Company's Proxy Statement
for Annual Meeting of Stockholders dated March 31, 1999).
10.9* Form of Incentive Stock Option Agreement under the Willbros Group, Inc.
1996 Stock Plan (Filed as Exhibit 10.13 to the 1996 Form 10-K).
10.10* Form of Non-Qualified Stock Option Agreement under the Willbros Group,
Inc. 1996 Stock Plan (Filed as Exhibit 10.14 to the 1996 Form 10-K).
34
10.11* Willbros Group, Inc. Director Stock Plan (Filed as Exhibit 10.9 to the
S-1 Registration Statement).
10.12* Willbros USA, Inc. Executive Benefit Restoration Plan (Filed as Exhibit
10.10 to the S-1 Registration Statement).
10.13 Registration Rights Agreement dated April 9, 1992, between the Company
and Heerema Holding Construction, Inc., Yorktown Energy Partners, L.P.,
Concord Partners II, L.P., Concord Partners Japan Limited and certain
other stockholders of the Company (Filed as Exhibit 10.13 to the S-1
Registration Statement).
10.14* Willbros Group, Inc. Severance Plan dated January 1, 1999 (Filed as
Exhibit 10.22 to the Company's report on Form 10-K for the year ended
December 31, 1998, filed March 31, 1999 (the "1998 Form 10-K")).
10.15* First Amendment to Credit Agreement dated April 2, 1998, by and among
the Company, certain designated subsidiaries, Credit Lyonnais New York
Branch, as co-agent, certain financial institutions, and ABN AMRO Bank
N.V., as agent (Filed as Exhibit 10.25 to the 1998 Form 10-K).
10.16 Second Amendment to Credit Agreement dated October 1, 1998, by and among
the Company, certain designated subsidiaries, Credit Lyonnais New York
Branch, as co-agent, certain financial institutions, and ABN AMRO Bank
N.V., as agent (Filed as Exhibit 10.26 to the 1998 Form 10-K).
10.17 Third Amendment to Credit Agreement effective June 30, 2000, by and
among the Company, certain designated subsidiaries, Credit Lyonnais New
York Branch, as co-agent, certain financial institutions, and ABN AMRO
Bank N.V., as agent (Filed as Exhibit 10.1 to the Company's report on
Form 10-Q for the quarter ended June 30, 2000, filed August 14, 2000).
10.18 Security Agreement effective July 27, 2000, by and among the Company,
certain designated subsidiaries, and ABN AMRO Bank N.V., as agent (Filed
as Exhibit 10.2 to the Company's report on Form 10-Q for the quarter
ended June 30, 2000, filed August 14, 2000).
10.19 Fourth Amendment to Credit Agreement effective June 30, 2000, by and
among the Company, certain designated subsidiaries, Credit Lyonnais New
York Branch, as co-agent, certain financial institutions, and ABN AMRO
Bank N.V., as agent (Filed as Exhibit 10.3 to the Company's report on
Form 10-Q for the quarter ended June 30, 2000, filed August 14, 2000).
13. Portions of the Company's 2000 Annual Report to Stockholders.
21. Subsidiaries of the Company.
23. Consent of KPMG LLP, included on page 31 of this From 10-K.