Although he appreciated the award, Canada’s Entrepreneur of the Year isn’t exactly turning cartwheels of joy these days.

Ernst & Young bestowed the honour on David Robson last week. But instead of celebrating, the CEO of Veritas DGC Inc. remains preoccupied with the slump that continues to dog the seismic market, described by analysts as “troubled.”

Founded by Robson in Calgary, Veritas DGC represents an astonishing success story, climbing an almost vertical growth curve during its 28-year history.

With Robson charting the ascent, the company evolved from a nondescript, debt-saddled seismic data processor (total staff: eight) into a Houston-based giant that employs 3,807 people and does business in 20 countries.

Today, Veritas DGC is the global energy industry’s third-largest supplier of integrated seismic/geophysical services.

Veritas DGC photo
David Robson had seen bad economic cycles before, but has seen his company survive a particularly agonizing year.

But 2002 has been a long, tough slog.

The company, which trades on the Toronto and New York stock exchanges (NYSE & TSX: VTS), recently published disappointing fourth-quarter results to cap a discouraging year. Current Veritas share prices are “terrible,” Robson snorted. Last week, they languished at about half book value.

“It’s really hard work to make money in our business today,” admitted the chief exec, who was both candid and affable during a teleconference interview with Business Edge from his Houston office.

“This is the first cycle I’ve ever witnessed where commodity prices have come back strongly, but oil and gas exploration activity hasn’t followed suit,” said Robson, who originally emerged from the University of Alberta’s engineering faculty.

Before offering his take on the seismic slowdown, Robson revisited the lowlights of an agonizing year, saying: “Sometimes the stars seem to align against you.”

So it seems.

In the first quarter alone, Veritas DGC was forced to bow out of four contracts, citing “force majeure” (loose translation: act of God) in each case.

“We had never once done that in the company’s history,” grimaced the 60-year-old product of Bawlf, Alta. (“Two towns east of Camrose on Highway 13.”)

Freak lightning storms destroyed expensive equipment, there were “community difficulties” in Bolivia and “a number of other problems.”

Then, in August, a proposed merger with Petroleum Geo-Services ASA, which was to have created the world’s second-largest geophysical services company, went south.

Both parties got cold feet at the last minute and bolted from the altar.

“There were a lot of reasons why we pulled the plug. We went through three separate renegotiations . . . and I think, eventually, their management soured on the deal as well,” Robson reflected.

In any case, the pre-nuptial divorce cost Veritas DGC almost $15 million US in outside fees, including $7.5 million to lawyers. Those costs contributed to a $23-million net operating loss for the fiscal year.

On the bright side, such unusual items are now in the past: “2003 is going to be OK,” vowed Robson. “We’ll be reasonably profitable this year. And we’ll be cash-flow positive, come hell or high water.”

Those aforementioned “troubles” aren’t unique to Veritas DGC. The company’s primary competitor, WesternGeco, is shutting down land crews, beaching marine seismic ships and laying off 1,200 people.

“That’s created a negative tone in our market,” Robson said.

Other reasons for the flat seismic market, ironically, have to do with currently robust crude prices.

Many big players (i.e., the Veritas customer base) have relegated exploration to the back burner because their cash is consumed by production, particularly by expensive deep-water projects.

Then, too, most companies are stacked up with second-class drilling prospects, the kind that don’t earn profits when prices are low, but which have recently become viable.

“And today’s markets are forcing public companies to live within their means more than we’ve ever seen before,” added Robson.

“Fortunately, we’ve cut our capital spending by $15 million, and we’ve cut operating costs. We’re in pretty trim shape and we’re gonna stay that way.”

While waiting for a turnaround, Veritas has beefed up its R&D component. Meanwhile, Robson and his team are plotting strategy for tackling new and potentially lucrative markets, including Russia.

And now, THE question. What about Kyoto?

Veritas does 40 per cent of its business offshore. Of the remaining 60 per cent, only a third is done in Canada. Of course, the U.S. has already rejected Kyoto. But not David Robson. Not entirely.

“I’m not sure Kyoto is a good deal, but I do believe global warming is a serious issue for everyone,” said the no-nonsense award-winner.

“If we don’t take care of our planet, we won’t even have a place to live.”