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From the Survey: Bristow Group Inc.
Bristow Group (BRS) has been considered one of the leaders in helicopter services worldwide. The company charters helicopters to transport personnel, from onshore bases, to offshore drilling rigs, platforms and other installations. Some of its major transportation operations are located in the United Kingdom, United States, Gulf of Mexico, and Africa. As one of the first civil helicopter transport companies to work in the oil and gas industry, Bristow has valuable experience and expertise in the field. Today, the company not only provides transportation for drilling and production crews, but also handles military transport, as well as search and rescue operations.
Alan Bristow, a former navy pilot, formed Bristow Helicopters in 1953 as one of the earlier suppliers of offshore services for the United Kingdom. As the company expanded its fleet and operations globally, it gained various designations for training purposes for military pilots and search and rescue operations. In 1996, the company was purchased by Offshore Logistics, an American helicopter operator, which structured the acquisition as a reverse takeover. It re-branded itself as the Bristow Group, and eventually relocated its headquarters to Houston, Texas.
While the company has experienced growth over the years, the recent recession halted that growth. However, since 2008, the stock has been trending upward, from a low of about $19 to its recent valuation above $51. The ability to manage its debt levels has provided it with the capability needed to take advantage of certain growth opportunities as they arise. Bristow’s continued expansion into the Gulf Coast and Africa has provided increased opportunities for the company. As demand for ultra-deepwater rigs begins to rise in the Gulf and the North Sea, especially as major players such as BP (BP), Chevron (CVX - Free Chevron Stock Report), and Petrobas (PBR) look to stake their claim and take advantage of the currently elevated oil prices, management continues to see this as an attractive opportunity, and expects to take advantage of the continued design and construction of these rigs.
However, not all things look rosy for the company. A recent grounding of Super Puma helicopters, in regards to a safety incident that occurred earlier this year, has halted some of the company’s fleet. Some 16 aircraft are yet to be cleared for operation. Company brass has countered with a contingency plan and added several new aircraft to its fleet to meet demand and continue operations for the time being. The grounding could be viewed as a temporary headwind. Bristow has continually emphasized its Target Zero safety plan, ensuring a culture, which embraces safety first. This has enabled the company to achieve industry-leading safety records.
The growing movement of search and rescue privatization is another growth factor for this company. Search and rescue missions involve the use of specialized helicopters and personnel to carry out emergency missions and answer distress calls during some of the worst weather conditions. The company recently acquired Cougar Helicopters, an expert in search and rescue logistics, especially in the Atlantic. With additional expertise and equipment, this could be a long-term revenue driver for the company. In addition, the UK government is in the process of awarding multi-year, multi-billion dollar contracts for search and rescue in Europe. Overall, Bristow is in position to take advantage of this growing trend, which should augur well for its future.
With strong global brand awareness and a solid financial position in comparison to its competitors, Bristow continues to be a leader in its field. With the opportunities available, it will be up to management to take the necessary steps to continue the growth of this helicopter services provider. With the stock currently trading around its 52-week high, it remains to be seen if continued expansion can be sustainable. Macroeconomic pressure may challenge the company’s growth for the time being. For a more detailed report on Bristow Group, including long-term analysis and forecasts, subscribers should examine our full page report in The Value Line Investment Survey.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.