Hartford Business Journal

www.HartfordBusiness.com February16,2015•Hartford Business Journal 3 Terrorism, falling crude prices don't deter Wallingford oil tech firm By Brad Kane bkane@HartfordBusiness.com V olatile oil prices, Middle East terror- ism, and the falling value of Russian currency all pose threats to Walling- ford drilling technology maker APS Technol- ogy, but that's not stopping the company's management from projecting another double- digit revenue growth year in 2015. Even though falling oil prices have slowed domestic oil exploration, APS Technology expects to surpass the $200 million revenue mark for the first time this year, thanks to international growth and major procure- ment contracts with some of the U.S.' largest oil companies. "The ability to supply this equipment is something only very few can do and really sets us apart," said William Turner, APS's CEO and founder. Founded in 1994, APS manufactures mea- surement while drilling (MWD) technology that communicates to crude oil exploration companies exactly what direction they are drilling in and what kind of substances are around the drilling bits. The company competes with oil heavy- weights like Baker & Hughes and Halliburton that provide MWD services to the likes of Exxon Mobil and BP. But APS has found a fruitful market niche by actually selling MWD equipment to those in the oil field — rather than just providing services — and targeting smaller companies. APS has averaged 40 percent annual rev- enue growth since its founding, making it the leading independent supplier of MWD equip- ment, said Turner, a former Baker & Hughes executive. APS has received the Marcum Tech Top 40 award for 12 years in a row as one of the fastest growing companies in Con- necticut. It employs 420 worldwide including 320 in the Nutmeg State. Turner, though, expects growth to slow somewhat this year to around 30 percent. With oil prices falling, fewer domestic compa- nies have the capital to buy new equipment, he said, and even though its international busi- ness will keep APS in the black, volatile world politics play a role in its success overseas. "This year is going to be a difficult year for anyone in the oil business," Turner said. "That impacts us for sure." Oil impact Crude oil prices hovered around $53 per bar- rel in early February, roughly half of the average price for the last five years, according to the U.S. Energy Information Administration (EIA). While falling oil prices have led to a steady drop in gasoline prices to nearly $2 per gallon, they also have cut into oil companies' margins. EIA predicted in its Feb. 10 short-term energy outlook that oil prices would stay around $55 per barrel for much of the first half of the year before rising to $67 per barrel in the fourth quarter. Gas prices should fluctuate accordingly, to average about $2.33 per gallon in the U.S. for regular unleaded, although Connecticut pric- es are typically 20-30 cents higher because of taxes and logistics. Tim Hess, lead analyst for EIA's short- term energy outlook, said lower oil prices will have a continued impact on produc- tion, although not as much as prices would indicate. The number of oil rigs operating in the U.S. is down nearly 18 percent over the past year, he said, but these rigs tend to be the older and less efficient ones so the level of production hasn't fallen at the same pace. "The growth in crude production … is not going to be as robust as it has been, but it is not going away either," Hess said. EIA does expect U.S. oil production to drop from 9.3 million barrels per day in January to an average of 9.2 million barrels per day for the year. However, with continued strong supply in the international market, prices will remain in check. Bullish long-term outlook Even with lower prices, oil exploration is a major business opportunity with plenty of money to be made, Turner said. About 95 per- cent of APS' business is international, where long-term contracts are more common and supply a steady stream of revenue. Strong international business plus the potential to land a major contract with a national oil company to sell MWD technology will help APS keep up its double-digit annual growth, Turner said. APS sells its basic MWD package plus eight add-on products to aid in the drilling process, so these contracts can add signifi- cantly to the company's bottom line. The add- on products include items like vibration sen- sors and communication devices that give a driller more information about what is going on beneath the surface. "These things get into how efficient is the drilling operation," Turner said. Subscribe it's in print Subscribe today and get access to the information that Central Connecticut business people and decision makers use every day. To subscribe call 845-267-3008 or go to www.HartfordBusiness.com You'll find it in print • Need to grow your busiNess? • research your competitioN? • FiNd hartFord's latest busiNess News aNd ecoNomic treNds? G r e at e r H a r t f o r d ' s B u s i n e s s n e w s w w w. H a r t f o rd B u s i n e s s . c o m for more B2B news visit March 31, 2014 Volume 22, number 19 $3.00 subscribe online June 5, 2014 Only 10 weeks until C T B E x p o . c o m Index ■ Reporter's Notebook: PG. 5 ■ Week in Review: PG. 6 ■ The List: PG. 10 ■ Deal Watch: PG. 11 ■ Nonprofit Notebook: PG. 19 ■ Opinion & Commentary: PG. 20 Faces oF Business Main Street Mainstay Manchester's Bray Jewelers has survived for almost 100 years. Read about the family business' secrets to success and what makes customers keep coming back. PG. 3 Focus: economic DeveloPment Social Entrepreneurship Hartford business accelerator aims to nurture socially conscious businesses. PG. 8 Music copyright lawsuits cost restaurants unexpected thousands By Matt Pilon mpilon@HartfordBusiness.com A few years ago, nine songs were played inside Shelton's Vazzy's Cucina restaurant that ended up costing owners John Vazzano and Vincent L. Noce $18,000. That's because an agent of licensing giant Broadcast Music Inc., which represents the artists who owned the tracks, attested to being present when the tunes were played and sued Vazzano and Noce for copyright infringement, claiming the restaurant's music qualified as a public per- formance. Under federal copyright law, that meant the restaurant had to pay for the rights to play the songs, BMI said. Vazzano said he thinks a private party actually played the tunes. Broadcast Music Inc. • Founded in 1939 • Represents more than 600,000 songwriters and publishers with more than 8.5 million songs. • Distributed 85 cents of every dollar in licensing revenue in royalties — that amounted to $814 million in fiscal 2013. By Gregory Seay gseay@HartfordBusiness.com B y late May, the Corporation For Independent Living (CIL) expects to have in its hands title to the derelict Capewell Horse- nails factory in Hartford's South End in a bid to convert the idle eyesore into 72 apartments and an adjacent parcel into 24 affordable townhomes. If it does, it will open another fruit- ful chapter for a South End nonprofit that has leveraged — and exported — its talent as a group-home developer to shelter a diverse swath of central Connecticut's population. It, too, will be one of the final swan songs before the yearend retirement of its first and only chief executive. Since its launch in 1979 to finance, build, lease out — then ultimately give away — supportive shelter for thou- sands of the state's physically and mentally disabled, CIL has invested $458 million to construct or convert 2,205 dwelling units into shelter for 7,200 residents in Connecticut and Massachusetts. For at least a dozen years, CIL has applied that same skill set to its expand- ing for-profit realty development opera- tions that include Capewell, and a neigh- boring nonprofit-office-space cluster. In February, CIL announced it bought and will resume work on the $3.34 mil- lion Depot Crossing mixed-use project John Vazzano, owner of Vazzy's Cucina in Shelton, was upset when his restaurant had to pay $18,000 to settle a music copyright lawsuit. P h o t o | P a b l o R o b l e s Continued on page 16 Continued on page 15 Martin "Marty'' Legault, president and CEO, Corporation For Independent Living (CIL) With Legault, developer CIL soars as landlord Sued for a ong Continued (Clockwise from above) The Integrex machine where APS technicians make drilling parts for customers; an APS drilling test facility rig, and the technology that can tell drillers what direction they are headed in and what exactly they are drilling. P H O T O s | C O n T r i b u T e d

• Cover