i spoke with robert chamberlain, DPDW's chairman of the board, recently about the deep water LARS press release. as you can imagine, the reality of this new product exceeded my expectations, and i'm sure as you read our conversation many of you will have the same reaction. this dynamic is not just about launch and retrieval systems, it's about proteus and just about any future products they create. imo the word "synergies" cannot be overused in this context.
note: i have paraphrased his answers, so these are not direct quotes.
1.
Q: what is typical product lead time for the deep water LARS? how do you see this changing as more are built?
A: it's hard to say because each one is customized. lots of steel is used, cut and fabbed, other items are components that may require special ordering. but a single unit can be assembled in a 10 to 30 day time frame if all parts are available.
2.
Q: if the minimum price is $1.4M, what's the top of the range?
A: it depends on what the customer requests, and is difficult to forecast. the higher end of the range would be completely custom, and if it requires more R&D then of course that adds time. it's worth noting that some of our competitors are quoting delivery times of two years. that's because of their backlogs. deep down offers a custom solution to anyone who wants it, which is totally state of the art, and we deliver it very quickly.
3.
Q: what is the status on the patented wraparound level wind sensor system, and the time frame to secure it?
A: patent investigations involve searches, but we don't think there's anything else out there like it. right now we are in the application stage and the longer it stays in process the harder it will be for competition to engineer around the idea.
4.
Q: do you have ample production capacity for the perceived demand?
A: our capacity is good, and if we need more it's available at a reasonable price.
Q: how would you describe the market for the new LARS?
A: we see a huge potential market as more companies involved in offshore operations put ROVs on their vessels. we feel we are perfectly positioned to benefit from this trend and it also dovetails directly into the mako technologies acquisition.*** (see below)
5.
Q: will mako be renting out the deep water LARS, and if so, how soon could this happen?
A: definitely. as far as "how soon" it's just a matter of when the client needs it.
Q: is this happening already?
A: i can't comment on that.
6.
Q: is the distribution arrangement with PSS (perry slingsby systems) exclusive?
A: no, we have the ability to sell anywhere, and with anyone, we want.
7.
Q: have others besides PSS and VE (veolia ES special services) expressed an interest in the deep water LARS yet?
A: once again, i can't comment.
8.
Q: generally speaking, what are margins like on the LARS, the proteus AHC winch, etc.?
A: state-of-the-art, leading edge equipment that can be delivered faster than the competition allow for higher margins. DPDW's objective is to provide products across the board that fit all those characteristics. we don't want to make commodity type products, only ones that are advantaged in terms of the technology they offer. this is how margins stay high and customers stay happy.
9.
Q: will the LARS have a broader market than the proteus or are these two items on par in that regard?
A: the LARS probably has a broader market because not all applications require active heave. proteus may or may not be a complement to a LARS unit. in other words, you need a LARS to have the proteus, it's not the other way around. there will be some applications that require a LARS with a proteus attached.
10. do you have any other new products in development for 2008?
A: we always have products in various aspects of development. as exploration in deep water becomes more and more of an issue, the customers always require new technology to get the job done. as we custom-engineer specific solutions, many new products come from that process.
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Deep Down Delivers Deepest Rated LARS in the World
*** imo RC meant mako could rent ROVs to the same customers who purchase or lease a LARS, but i didn't ask a follow up question at the time. however, i think we can infer from the mako acquisition PR that ROV rentals will be a significant part of their business:
Deep Down Announces Acquisition of Mako Technologies
"An expansion of the ROV fleet can yield benefits beyond increased rental income, including increased service revenue from two and three man ROV operating crews and the opportunity to sell additional launch and retrieval systems ("LARS")"... said Eugene L. Butler, Deep Down's CFO.
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