Commercial

Era ‘Clear Upward’ Move in US Oil & Gas Work; Stays Cautious on H225

By James T. McKenna | August 10, 2017

Era group AW139

Era Group's Leonardo AW139. File photo

Era Group over the last six weeks has seen “a clear upward trajectory in customer activity” from U.S. oil and gas operations that is driving higher utilization of helicopters flying under contract and more aircraft being placed on the contract through the end of the year.

“We are not saying that this is a dramatic increase,” said Era President/CEO Christopher Bradshaw. “We are not saying that this is a broad-based increase throughout the market.”

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What the Houston-based operator is seeing, “for the first time in a long while, is a clear upward trajectory in activity levels amongst our oil and gas customers in the U.S.,” Bradshaw said.

“Above and beyond the normal seasonal pattern that we experienced in our business, this is a non-seasonal” improvement, Era’s chief said, resulting from a mix “of exploration activity and production activity” and some short-term projects.

Apart from that improvement, he said Era remains reluctant to fly its Airbus Helicopters Super Pumas.

Bradshaw’s comments came as he briefed financial analysts Aug. 9 on Era’s performance for the second quarter.

Era reported a net loss of $2.8 million for that quarter, which ended June 30, on operating revenues of $57.9 million. That compared to a profit of $1.9 million on operating revenue of $63.3 million for the same quarter in 2016. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the most recent quarter totaled $11.9 million, compared to $10.7 million in the same period a year ago.

Era’s quarterly loss decreased from the $5.6 million reported for the quarter that ended March 31, 2017, which came on operating revenue of $54.5 million. EBITDA for the March quarter totaled $7 million.

Despite the improvement in its U.S. operations, Bradshaw said, "I would definitely not say that the global helicopter market is in a state of balance between supply and demand.” That balance has improved off the industry’s more depressed levels, with variance from aircraft model to model and region to region.

“Overall, the global market for the most marketable oil and gas assets, such as [Sikorsky] S-92s and [Leonardo] AW139s, has improved,” he said, but Airbus’ H225 and AS332 L2 Super Pumas remain problematic in the wake of the April 29, 2016, crash of an EC225 LP in Norway that killed 13 people.

Civil aviation authorities in Super Pumas’ major European markets, Norway and the U.K., in July cleared the way for the H225’s return to service. That followed European Aviation Safety Agency and U.S. FAA decisions to lift their Super Puma groundings. Still, the root cause of the 2016 accent remains under investigation in Norway, and Era remains cautious.

“Era will not operate the H225 helicopters in our fleet unless and until we can develop a detailed safety case” that demonstrates they can be operated safely, Bradshaw said. The operator in November 2016 sued Airbus for damages related to its purchase of H225s.

“Beyond regulatory approval and the completion of the accident investigation,” Bradshaw said, “the other key milestones for a potential broad-based return to service of these helicopters include confidence amongst the helicopter operators, our oil and gas customers and the labor unions representing their employees.”

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