Deep Down Inc. sees success despite oil industry's downturn

Deep Down is an oil field services company based in Houston that specializes in offshore drilling supplies and services.

The oil industry affects many people throughout the country and world. In recent times, the decreasing cost of oil has brought financial trouble to many oil companies and resulted in job losses across many oil-related industries.

One company that has been successful despite the uneven economic climate is Deep Down, Inc. Deep Down is an oil field services company based in Houston that specializes in offshore drilling supplies.

In a press release on Oct. 7, the company announced it received its biggest order yet, totaling $13 million from a super-major operator.

Big orders
The order will be delivered to the Gulf of Mexico in 2016. Of the five major orders the company announced this year, this is the fourth that will be carried out in 2016 and all are located in the Gulf of Mexico.

"Receiving an order of this magnitude, during the current industry downturn, is a major vote of confidence in our ability to continue providing innovative solutions for our customers," Ron Smith, CEO of Deep Down, Inc. said in the press release. "We are humbled by the trust placed in us and are well prepared for the work ahead."

The orders this year included several of Deep Down's products and services, such as Subsea Isolation Valve System, Umbilical Termination Assembly, flying leads and the company's patented Non-Helical Umbilical.

The SSIV is a system installed on underwater valves which prevents the release of hydrocarbons. The system can be monitored and activated from above the surface. It creates a safer work environment.

According to one media outlet, umbilicals are cables that transfer power, chemicals and messages from the surface to underwater pumps and other structures. Umbilical Termination Structures are units under the sea that connect the operations above the surface to the subsea developments. In some cases, the cables are connected using flying leads, comparable to extension cords.

Other orders announced in 2015 so far have totaled $3 million in January, $2 million in April, $2 million in August and $2.5 million in September. Though Deep Down has been successful in bringing in large orders from super-major operators, the company is feeling the effects of the oil industry's downturn.

Oil industry's impact
According to Seeking Alpha, in Deep Down's First Quarter 2015 Financial Results Conference Call, Smith and CFO Gene Butler addressed the financial health of the company. Butler explained in the first quarter of 2015, Deep Down grossed $2,235,000, whereas the first quarter in 2014 the company saw a gross profit of $2,268,000.

"The business environment continues to be very uncertain with the low price of oil," Butler said in the conference call. "However, our financial strength and balance sheet continues to be very strong and our backlog remains over $30 million."

Despite the first quarter's gross profits falling short of 2014's first quarter, the second quarter of 2015 showed more progress. In a press release, the company explained the second quarter brought in gross profits totaling $2.2 million, $400,000 more than 2014's second quarter.

To learn more about the subsea pumps market, visit PennEnergy's research area.

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