In a move with more symbolic than practical importance, the offshore service vessel company Tidewater is winding down its local operations in favor of Houston after more than six decades of being headquartered in New Orleans.
The move in some ways is a formality, as many of the company’s executives already have migrated to the Texas city, the capital of the U.S. energy industry, in recent years.
The company will likely close its office in the Pan American Life Center on Poydras Street within the next few months, costing New Orleans about 30 jobs.
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Like many others in the hard-hit energy industry, Tidewater and other energy service companies have suffered during oil’s latest boom-or-bust cycle.
Still, losing a headquarters — especially to a neighboring state — is always a blow to the region, which experienced a similar setback last month when Smoothie King announced plans to move to Dallas.
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And Tidewater, which supplies marine support vessels to the petroleum industry, was one of the last major, publicly traded energy companies to remain based in New Orleans since a migration to Houston began after the oil bust of the mid-1980s.
In February, Tidewater named John Rynd as the company’s new president and CEO. Executives then signaled their plans in March, when they listed Houston as the dateline for a news release about an upcoming earnings announcement.
During a call with analysts on March 15, Tidewater’s executive vice president and chief financial officer, Quinn Fanning, was asked about the change.
“The migration, at least of the headquarters staff, is toward rather than away from Houston,” he said. “So we would expect to be downsizing, if not ultimately closing, the New Orleans office.”
The move comes a year after Tidewater, hampered by a global slowdown in oil-drilling activity and a prolonged slump in oil prices, emerged from a prepackaged bankruptcy proceeding that wiped out $1.6 billion in debt.
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Oil prices plunged after hitting $115 per barrel in mid-2014. Although prices have recovered some of those losses, rising above $70 a barrel last week for the first time since 2014, Tidewater and other energy service companies have suffered.
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Now, Tidewater plans to close its New Orleans office “within a few months,” according to Jason Stanley, the company’s director of investor relations. He described the move as "a cost reduction" and added: "To be honest, this has been a transition that’s taken place over quite a number of years."
In mid-2014, the New Orleans office had about 100 employees.
Many of the remaining local employees were offered positions in Houston, an offer that some have taken.
ExxonMobil relocated its offshore production operations from New Orleans to Houston in 2003. Hurricane Katrina’s upheaval in 2005 only hastened the move for many companies, including Tidewater, which moved a handful of high-level executives after the storm and flirted with relocating its corporate headquarters in 2007.
In the end, Tidewater’s headquarters remained in New Orleans, as did about 85 of its employees. John Laborde, a founder and former president, chairman and CEO of Tidewater, advocated keeping the company in New Orleans, but some executives who had moved to Houston after the storm pressed for the change.
"There's vibrancy and intellectual activity" in the Texas city, Dean Taylor, then chairman, president and CEO of Tidewater, told The Times-Picayune in 2007. "It's where ideas are being germinated and seminated. It's business-friendly. It's a city that works in every facet."
A decade later, however, Laborde’s view hasn’t changed.
“It has always been considered a Louisiana and a New Orleans corporation, and it breaks my heart that those who are in power now are deciding to move it,” Laborde, 94, said by phone Friday from his office in the same Poydras Street high-rise that Tidewater shares.
Laborde, who retired from Tidewater in 1994, knows that Houston offers some advantages, including close proximity to much of the company’s customer base and others who are hiring offshore vessels. But advances in technology have made it possible to handle more business remotely, and company executives could easily travel between the two cities for in-person meetings when necessary.
Tidewater's history in New Orleans goes back more than six decades. Tidewater Marine Service was formed in the 1950s by a group of investors led by the Laborde family, who developed the first service vessel that was designed to support the nascent offshore drilling industry.
With One Shell Square — the Poydras Street high-rise and key symbol of a time when Louisiana's fortunes soared on oil and gas — no longer bearing the oil giant’s name, some longtime industry observers say having Tidewater move to Houston closes a chapter in New Orleans history, decades after Houston eclipsed it as an energy hub.
Initially, New Orleans gained prominence as “the closest point on dry land to where the oil and gas was being developed offshore,” said Eric Smith, executive director of the Tulane Energy Institute. But such considerations are less important these days, and Houston — boasting a much larger population and a stronger economy — long ago distinguished itself as a leading city for corporate investment.
“There are examples of people who have stayed, or companies that have left behind a division in New Orleans, that sort of thing,” Smith added, “but we have relatively few oil and gas companies headquartered in New Orleans anymore.”
Tidewater Marine Services survived the oil bust of the mid-1980s and emerged from the downturn by following a path of growth through mergers and acquisitions. By 2000, the company began an aggressive new building program that allowed it to upgrade its fleet as customers pushed exploration and drilling farther into the Gulf.
Tidewater's fleet is the largest in the industry, deployed in dozens of countries, as the push to explore for and produce oil and gas offshore has ventured into deeper waters. The bulk of the fleet — more than 90 percent — works outside the U.S.
Going forward, Tidewater plans to maintain an operational base in Amelia, near Morgan City, with roughly two dozen employees. Across the globe, the company has about 4,600 workers.
At this point, the company's move to Houston is hardly a surprise, according to an industry analyst who has followed Tidewater for a decade.
“It reflects, in my opinion, an evolution of the offshore market, whereby the Gulf of Mexico is becoming less important than other major offshore fields, for example, South America, the North Sea, West Africa, places like that,” said John Deysher, president of Bertolet Capital LLC, an investment adviser to the Ohio-based Pinnacle Value Fund.
“I think it’s just inevitable that the resources are going to be shifted to Houston, since it’s a much more accessible gateway than New Orleans,” he said.
What's more, with Tidewater having only recently emerged from bankruptcy, and general uncertainty looming over the offshore industry, he said, it makes sense for the company to cut costs by consolidating its offices in Houston.
“It’s probably hit the bottom, and it has rebounded slowly," he added, "but I just don’t think they want to be burdened with two corporate headquarters.”
Laborde, however, wishes they’d reconsider.
“I and some of the other old-timers — if there are any — would be very pleased if it were retained here and was not officially moved to Houston, but that may be beyond my control,” he said.