Kuwaiti-Owned Area Firm Is in Quandry : Energy: Employees of oil explorer Santa Fe International don’t know how the order to freeze Kuwait’s assets in the U.S. will affect them.
Santa Fe International is a low-profile oil and gas exploration company that operates from a huge walled compound of red brick in Alhambra but is still Kuwait’s most visible investment in corporate America.
In the wake of Iraq’s invasion of tiny Kuwait, worried Santa Fe International employees attempted to conduct normal business on Friday.
Eight employees of Santa Fe International--six of them U.S. citizens--were reported missing in Kuwait on Friday. And back home, there was some confusion about what the U.S. government’s freeze of Kuwaiti assets would mean for Santa Fe International, which is owned by Kuwait Petroleum Co. In fact, some employees feared their paychecks might bounce.
(The Treasury Department said Friday that U.S. financial institutions will be allowed to accept deposits and clear checks for Kuwaiti-controlled firms in the United States so the companies can do business.)
For Santa Fe International, this week’s events mar a comeback year for it and the rest of the oil-drilling industry.
After a lengthy slump, the industry has been working on its best year since 1986. Wells drilled for oil and gas in the United States and American waters rose 13.4% in the first six months of the year, compared to the same period of 1989, according to Petroleum Information, a company owned by Dun & Bradstreet Corp.
No Santa Fe International officials returned repeated telephone calls on Friday. Because the company is privately owned, it releases no financial information. However, Dun & Bradstreet put Santa Fe’s revenue last year at $450 million.
The company has about 2,000 employees worldwide, 30 of them in Kuwait.
In the once-upon-a-time days of the oil industry, Santa Fe International had few worries--other than being confused with the well-known but unrelated railroad.
But the 1980s were tough on the company, which reported revenue of $1.23 billion in 1980, the year before it was acquired by Kuwait Petroleum for a generous $2.5 billion. The $51-per-share price was more than double what the company’s stock had been selling for. The offer came after Chief Executive Edfred L. Shannon Jr. declined to accept a Kuwaiti offer of a minority investment, suggesting instead that they buy the entire company.
After the politically controversial sale, the company and its subsidiaries, particularly its prominent C. F. Braun engineering unit, received a significant amount of work from the Kuwaitis.
However, the industry slump eventually caused significant shrinkage at the company. The Tulsa office of its Santa Fe Minerals unit, for example, was reduced to fewer than 100 employees from more than 500.
Observers say Santa Fe International, which is still headed by Shannon, has obtained its share of the industry rebound. And the undisclosed price paid last year for C. F. Braun by a subsidiary of Dallas-based Halliburton also fattened company coffers.
Santa Fe International continues to rank among the largest oil and gas exploration companies, with much of its drilling occurring outside the United States. The 44-year-old company operates about 70 rigs--nearly 30 of them offshore, according to the International Assn. of Drilling Contractors.
