CH2M hill discontinues divestiture process: decides to keep oil and gas holdings for the long-run.

• Author: White, Rindi
• Position: BUSINESS

Call it the seven-year itch, perhaps. Colorado-based engineering firm CH2M HILL last year went through a transformative experience, first deciding to explore a sale of a portion of the company's oilfield services business it had purchased in 2007, then to keep them and make them stronger than ever.

The abrupt decline in oil prices between November 2014 and this January definitely informed the company's decision to keep the oilfield side of its business in place, says Matt McGowan, head of corporate development at CH2M HILL. At the same time, the company's perception of that facet of its business only got stronger.

"Over the course of a not-very-long process, the change in oil prices was dramatic," McGowan says. "The perception was [at CH2M HILL], we didn't think the value of our business had changed. We got very comfortable with the business ... very comfortable with the opportunities around us. We got bullish about the business we were in."

Oilfield Services a Relatively New Direction

CH2M HILL is primarily a company focused on engineering water, transportation, and environmental projects. That changed in 2007 when Alaska oil field service company VECO Corporation was mired in a controversial federal lawsuit in which company leaders pled guilty to charges of extortion and bribery, among other charges. VECO leaders resigned in May 2007 and talks of selling the company to CH2M HILL began the same month. The sale wrapped up in September 2007.

At the time the VECO purchase was made final, CH2M HILL employed between forty and sixty people in Alaska. The company has been operating here since 1964, says John Corsi, head of public affairs and media for CH2M HILL.

Adding VECO increased the company's size by more than 25 percent, Corsi says, although the VECO legacy holdings (roughly 2,600 oil and gas employees in Alaska and another 1,000 in the Russian Sakhalin Island oil fields) now represent about 10 percent of CH2M HILL's workforce.

The decision to acquire VECO and move in a new direction was not undertaken lightly.

"We acquire for business fit and culture fit," says Patrick O'Keefe, US regional managing director for CH2M HILL. "The VECO legacy acquisition, not just in Alaska but elsewhere, has become part of CH2M HILL's culture. They have completely diversified our business."

McGowan says the company had a strong desire at the time to gain more of a foothold in the oil and gas industry.

While some of the services provided on the North Slope and...