Having completed its acquisition of RigNet on 30 April 2021, Viasat can look forward to achieving its stated aims of expanding and diversifying its commercial connectivity portfolio, while adding complementary technology.
The expected benefits of the Viasat RigNet acquisition include:
- Enhancements to Viasat’s sector expertise
- Expansion into adjacent industries
- New customer base
- Infrastructure service
- New systems and related services
- Integration activities
- Anticipated value of the combined business to customers and partners
- Expected performance from RigNet’s advanced software and communications technologies
The key benefit for RigNet centres around alignment with Viasat’s global operations ahead of the launch of three Ka-band communications satellites in geostationary orbit. ViaSat-3, initially set to launch in 2021, has been pushed back with the launch of its first satellite in early 2022.
This article is a follow-up to our Q2 roundup of maritime connectivity acquisitions.
RigNet has been one of the go-to providers for offshore oilfield connection since 2001 (the firm has actually been in operation for almost 40 years under various entities and brands). From its Houston HQ it has provided connectivity services, applications and cybersecurity solutions for the offshore oil, gas and energy market. The international offshore energy specialist serves customers around the world from regional offices in the UK, Singapore, Middle East, Mexico, and Brazil, with another US base in Louisiana, employing roughly 680 staff globally.
RigNet has deployed its technology on more than 1,200 onshore and offshore sites (pre-COVID the firm held 1,386 sites) and 11,000 Industrial Internet of Things (IIoT) sites. RigNet has extensive sector expertise, an established customer base and a global delivery infrastructure to help accelerate Viasat’s ability to provide high-quality, affordable broadband connectivity and communications to the hardest-to-reach locations around the globe. Viasat was interested in RigNet not only for its position in the energy sector, but also for its “Intelie” real-time Machine Learning and Artificial Intelligence (AI) platform and IIoT offerings.
The 2020 industry slowdown resulting from Covid-19 and the concomitant fall in energy prices meant that RigNet’s full year revenue decreased by 14.4% to US$207.9 million, compared to 2019 revenue of $242.9 million. However, during Q4 2020, RigNet announced a significant multi-year contract with a global offshore drilling contractor, which commenced in April 2021. RigNet is now providing fully managed communications services in addition to services already being supplied, which include Intelie and other value-add applications and network security solutions.
RigNet also increased managed communications services being provided to one of the largest owners of floating offshore production, storage, and offtake vessels in Brazil. Finally, the company secured a long-term contract to deliver Intelie’s real-time machine learning and software solutions to a premier independent exploration and production company operating in the Permian Basin.
In fact, it stated in its 2020 full year results that it had a system integration project backlog of $7.7 million.
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Before the Viasat RigNet acquisition, RigNet divided its business into five segments:
- Managed Communications
- Cybersecurity and Encryption
- IIoT and Applications
- Data and AI (Machine Learning Analytics)
- Systems Integration
These five areas bring to Viasat a suite of capabilities that can only enhance the company’s profile and profitability.
Managed Communications covers fully-managed voice and data networks offering complete communications infrastructure with satellite backhaul with L-, C-, Ka-, and Ku-bands, fibre, microwave and cellular with live monitoring and technical support. This is especially useful given RigNet’s broad experience for integrating remote locationswith ultra-secure, cost-effective data protection and applications. These systems, equipment, and software will be significant additions to the Viasat portfolio and also create new opportunities for for RigNet’s existing customers. They will soon have access to ViaSat-3’s network capacity, which is projected to total over 1 terabit per second.
Viasat already has a cybersecurity and encryption service called Eclypt, serving both the military and government, so there should be some interesting conversations as this and Rignet’s CyphreLink are aligned.
The IIoT and applications sector in RigNet offers a range of connectivity solutions, real-time monitoring applications, and end-to-end ‘sensor-to-server’ services anywhere in the world. Real-time monitoring application provides a geo-mapping interface for viewing remote sites, giving greater visibility and control of operations. Remote video intelligence system delivering cost-efficient, high-quality video streams and analysis use ultra-low bandwidth. This will further enhance Viasat’s comprehensive government and military satellite broadband services.
RigNet’s machine learning analytics solution is somewhat outside Viasat’s range and should be a major addition to their offering. The Intelie Live platform could capture every bit of data across distributed assets such as oil platform operations and ship engines; in order to capture, process and analyse thousands of events per second in real-time. This continuous monitoring and predictive analytics suite can deliver alerts with the information needed to prevent problems and foresee opportunities. The custom-built real-time query language, Intelie Pipes, and distributed in-memory analytics combine to create an advanced processing engine. Strangely enough, this product could be a problem for Viasat in the long-run. This will be discussed in the last paragraphs.
Systems integration for both RigNet and Viasat is essentially the same thing – grown up project management, so, in all likelihood, these will be easily amalgamated and the diversity of experience both bring to the table will enhance Viasat’s reputation.
In our opinion, from a commercial perspective, the Viasat RigNet acquisition is a relatively simple one. RigNet provides a relatively steady business in an uncertain energy sector environment, allowing Viasat to slowly grow its nascent maritime connectivity proposition and meld it with RigNet’s well-known managed communications services business.
It also allows Viasat to expand its portfolio into territories to become an end-to-end supplier. Doubtless OEM companies will develop a strong competitive offering, but that is more likely to be resolved by partnership rather than contention.
There is an outside chance that RigNet’s Machine Learning Analytics could negatively impact ViaSat’s existing business in that, as more and more AI is transferred on-board or on-site, there is less need to have an alert system triggered from a remote location. However, a counter argument could be as the technology is used more, bandwidth will increase as more real-time data is transferred to and processed in the cloud. Additionally, distributed intelligence will always defeat localised intelligence so synchronising and analysing reports from multiple sources can only be a sensible option. Nevertheless, it may not be necessary to transmit all data but merely a synopsis.
RigNet’s customer base, while significant in its sector, is unlikely to vastly disturb Viasat’s extensive client list. Viasat is very much larger than RigNet and has almost ten times as many employees. For several years hence, it is expected that RigNet will remain a niche supplier in Viasat’s portfolio until adoption of some of RigNet’s capabilities permeates the great organisation.