In this time of tremendous midstream growth, there’s no more exciting place to be than in the heart of the construction action. Willbros Group Inc. is in just that spot and is helping lead the pipeline build-out. But there’s more to the 100-year-old company than many realize. For the bulk of its existence, the company had primarily been known as a pipeline contractor. In recent years, however, it has become more diversified with entries into the utility transmission and distribution space. It is also becoming more prominent in the Canadian oil sands, as well as in the downstream maintenance and construction space. Here, the company’s financial boss shares the opportunities and challenges that accompany being a major infrastructure provider in these exciting times.

MIDSTREAM How did you get into the energy business?

WELCH I’ve been in the engineering and construction business for most of my adult life. I spent about 28 years with Brown & Root and KBR, where I learned the engineering and construction business. More importantly, I learned what project execution was about and what you needed to be able to successfully execute projects.

I worked both domestically and internationally while I was with KBR. I worked in just about every segment that they performed in during that period of time and really cut my teeth in terms of the engineering and construction business.

In 2006, I joined Willbros. In the time that I left for Willbros, I was the most senior level financial person at KBR, pre-initial public offering. I was the senior vice president of finance and administration.

MIDSTREAM Willbros reported net losses in 2011 and 2012. How do you plan to turn things around this year?

WELCH I think we have already started turning things around. If you look at our 2012 results, and if you break that down and look at it year-over-year, we’re showing improvement. And if you look at it as a quarterly breakdown, sequentially in 2012, you can see improvement that we’ve made in every quarter that year.

We have indicated in our last conference call to investors that we expected that trend to continue, and, in 2013, we were going to have year-over-year improvement. We expect to have that same quarter-over-quarter improvement this year. I think we are very much on an improved trend for the company.

MIDSTREAM What factors had previously been negatively impacting the bottom line?

WELCH Impacts were mainly associated with the diversification efforts that we made, largely around the utility transmission and distribution segment and the infrastructure transaction to acquire InfrastruX. We took on a lot of debt around that company. We also had a non-performing business unit, Hawkeye, which we now have as an asset held for sale. We declared Hawkeye as a discontinued business in the fourth quarter of 2012.

Hawkeye is a business that we have now pruned out of our portfolio, and we’re hoping to be able to complete a sale of that business before the end of this year.

MIDSTREAM Moving forward, are you planning to sell any other underperforming assets, and, if so, which ones?

WELCH We have publicly talked about how we are going to reduce our debt by between $50- and $100-million. We sold our Oman business in the early part of January and that netted us about $34 million. We paid down debt with those proceeds.

In addition, the Hawkeye business that I just referred to (that we discontinued) upon sale will also enable us to further pay down debt.

MIDSTREAM How is your company coping and keeping up with all of this midstream build-out?

WELCH A couple of years ago, we strategically went on a path to place offices in each of the major shale plays. We currently have offices in the Marcellus, the Bakken, the Eagle Ford, the Niobrara and the Utica. We also have a presence in the Permian basin. With most of those offices, we’re getting next to the customer. We recognized that there was going to be a lot of activity in those shale plays early on, and getting next to the customer was important.

By having an on-the-ground presence we are going to be able to sit right alongside them, work with them daily, have breakfast and lunch with them and talk about their needs associated with those areas. It’s been a very successful build-out.

We’re bringing in some substantial revenue in those regional shale plays that contributed to the $2 billion in revenue we did in 2012, and we expect that to continue to grow in 2013. We also built out some more engineering offices. Our main engineering office is in Tulsa, Oklahoma, and we’ve been there for years and years. We also have offices that we’ve opened up in Kansas City, which is serving a very important strategic piece of our business going forward. Kansas City is serving the integrity piece of our business. We’ve also opened up engineering offices in Denver, Fort Worth, Pittsburgh as well as here in Houston.

We’re expanding our presence closer to our customers and believe that with this build-out in the shale plays, this enables us to be right by our customers’ sides and fulfill their needs.

MIDSTREAM Have you had to expand your workforce or increase the amount of employees you had in order to keep up?

WELCH We have. The engineering side of our business has dramatically increased over the past two years. We have increased our engineering staff in all of our offices and have also increased our staff in the regional areas. In our regional offices, there are about 2,000 people right now, both craft and administrative people.

MIDSTREAM What have been the biggest challenges to operating in this new boom?

WELCH I think anytime you have a boom, resource constraints— especially in some of these shale plays—are a part of the challenge. We are taking on new employees and training them on our projects, processes, systems and safety procedures.

With that, I think we’re going to be able to not only perform jobs and work in a safe environment, but we are also going to be able to deliver the results that our investors want to see.

MIDSTREAM Have there been particular areas where you’ve seen major growth? What are they?

WELCH In all the regional plays that I talked about, we have grown dramatically over the past 18 months. We have also seen a very dramatic growth in the utility transmission side in Texas associated with the Competitive Renewable Energy Zones (CREZ) build-out that we’re doing for Oncor. We have seen some fairly dramatic growth there in terms of increased resources.

Lastly, Canada has been a very good place for us to be. We’re in the early innings of that market. We have grown our resources up in Canada pretty dramatically. We are operating in the oil sands. There are five major plants up there, and we’re in four of them. We are performing maintenance, small cap and fabrication types of activities in our Canadian offices.

If you look back in 2012, that was one of the areas that we saw some dramatic growth from the start of the year until the end of the year. We are expecting that same kind of activity to go forward in 2013. I am very bullish on Canada.

MIDSTREAM There is speculation that construction activity will taper off in four or five years. What happens after the boom?

WELCH One of the things we’ve done through our strategic efforts is this diversification I was referring to. We’re not just chasing capital projects. If you had looked at Willbros six years ago, we were heavily dependent upon pipelines and the capital projects associated with those pipelines.

Today we are under master service agreements, particularly in Canada, as well as in our utility transmission and distribution space. We are doing much more maintenance activities than we did even a few years ago. The recurring services nature of our business is to maintain the existing infrastructure, not just new infrastructure.

The existing infrastructure won’t be completely immune to a downturn, but certainly I think we’re in a much better position than we have been in the past.

MIDSTREAM There has been some confusion between Willbros and its former affiliation with Williams Brothers and The Williams Companies. Has it been a challenge to break away from that association?

WELCH Willbros Group is the original business of the Williams Brothers, Miller and David Williams, who started the company back in 1908. Successor Williams’ family members, mostly led by John Williams, made the decision to spin off the engineering and construction company in 1975.

This created our opportunity as Willbros to reinvent ourselves to compete for capital in business in this open market. We have expanded that business over 10 times in the past 13 years. And as you probably know, we are listed on the New York Stock Exchange. We proudly consider ourselves a service provider to The Williams Companies, which is the legacy company. They are a client of ours, and we are proud to say that.

Also, Miller Williams, who is the grandnephew of the founders that I mentioned earlier, currently sits on our board of directors today.

MIDSTREAM Is there anything else you would like to add?

WELCH Just as a finishing point: I believe the company we have today is a growing, more diverse and less cyclical company through some of the strategies we have embarked on over the past six years. We believe we are in the right business, that we are in the right space, and in the right locations to continue to grow the business.