U.S. Managers Run Firm Owned by Kuwait

In a San Gabriel Valley office complex surrounded by towering brick walls, gates and security guards sits a small but valuable chunk of the kingdom of Kuwait.

The 25-acre complex is home to Santa Fe International, an oil services and exploration firm that is one of Kuwait’s largest and most visible U.S. assets. Although the Alhambra-based company says it has beefed up security, Santa Fe has not noticeably changed its extensive global operations because of the Persian Gulf crisis.

Santa Fe engineers had worked on projects in Kuwait long before the company was acquired by Kuwait Petroleum in 1981 for $2.5 billion in the largest-ever Arab takeover of a U.S. firm. Four Kuwaitis--including a sheik--sit on the company’s six-man board of directors, and the company has served as a training ground for many young Kuwaiti engineers and managers.

However, U.S. managers, including longtime chief executive Edred L. Shannon Jr., operate the company with minimal interference from Kuwait, former executives say. “The company was run really by an entirely American management,” one former executive said. “The Kuwaiti involvement was limited to one as owners and as directors but not as management.”

The company’s ties with Kuwait helped shield it from the industry slump that saw many energy-related firms fold or merge during the 1980s. In fact, a former Santa Fe subsidiary, CF Braun, an engineering firm, counted on Kuwaiti contracts for more than 50% of its business at one point, a former executive said.

“There is no doubt that the Kuwaiti financial support allowed the company to weather the bad times, unlike the firms that did not have support,” a former senior manager said.

Santa Fe was formed in 1953 by a group of former Unocal employees, including Shannon. The firm does not release financial information, but Dun & Bradstreet estimated Santa Fe’s 1989 revenues at $450 million.