Thursday, February 22, 2018
Business

Down but not out: Tampa's Odyssey Marine preps to swap treasure hunting for bigger ocean game

For more than two decades, Tampa's Odyssey Marine Exploration has reveled in its reputation as a swashbuckling, deep-ocean treasure hunting enterprise.

Odyssey has hauled tons of gold and silver from centuries-old U.S., Spanish and British ships sunk deep in the Atlantic Ocean and adjacent waters. The company has enjoyed the limelight of more front page stories over the years in the New York Times than most major U.S. corporations and far more than any other business in the Tampa Bay area. It has been the focus of long sagas in magazines like The New Yorker and was profiled by a National Geographic staffer in the 2005 book Lost Gold of the Republic about what was then the richest monetary and archaeological marine salvage in American history. In 2009 the Discovery Channel launched a reality show called Treasure Quest with 12 episodes devoted to Odyssey Marine's shipwreck adventures.

"Shipwreck stuff was cool," Odyssey Marine CEO Mark Gordon said in a sit-down interview this summer. "The acid test is when your teenage daughter asks you to come to school day and tell them what you do."

Lately, the coolest dad around now looks more like the Maytag repairman sitting by a phone that does not ring. Odyssey Marine's forlorn Tampa headquarters sits back in a too-quiet office building on W Laurel Street, its second floor space eerily lean on employees. Tight times in the past year forced cuts in office staff to 22 from more than 40.

To keep Odyssey afloat, Gordon is transforming its mission by going after items on the ocean floor that are far less sexy than gold bullion — namely phosphates, minerals and metals. It may not be the stuff of front-page stories or must-see TV, but Gordon insists it could be far more lucrative — and with substantially less risk.

• • •

Nine years ago, when the company was in the thick of high-profile underseas treasure finds, Nasdaq-traded Odyssey basked in a stock price topping $80. This year, its sub-$4 shares briefly spiked at $9 in April after Odyssey took a draconian move of converting every 12 shares to one in order to raise its stock value. But shares have since sunk again, now trading between $2 and $4. Nasdaq has warned Odyssey its market value (shares times its stock price) is still below the $35 million minimum value required to remain as a viable Nasdaq-traded company.

One of Odyssey's last shipwreck finds in 2007, code named Black Swan, promised up to 500,000 gold and silver coins, a possible underwater mother lode. Except for one thing: Spain. The country, claiming rights to the ship and its Spanish wealth, took legal action against Odyssey, eventually landing two C-130 airplanes at Tampa's MacDill Air Force Base to load nearly 17 tons of salvaged coins and return the enormous bounty to Spain.

That long legal fight diminished Odyssey's stock price and resources, forcing company leaders to concede its days of treasure hunting as an independent company were at an end.

It all sounds bleak. And it is. Odyssey is at a crossroads. Will it slowly wither as a faded treasure-hunting business, or reinvent itself as a business that can find even greater sources of wealth than shipwrecks on the ocean floor?

• • •

Since its start, Odyssey's future was built on its specialized skills as a deep ocean shipwreck finder. Few treasure hunters can pursue shipwrecks deeper than 1,000 feet, and Odyssey used its ROV or "remotely operated vehicle" known as "Zeus" on wrecks as deep as 15,000 feet — nearly 3 miles underwater. That's what set it apart from so many shallow water treasure hunters.

Gordon still ponders Odyssey's choices.

"I do not know if we are the smartest guys in the world because we figured out something nobody else did," he laughs. "Or if we are the dumbest guys in the world because there is a reason no one else was doing it."

Now, in tighter times and to reduce debt, some key Odyssey assets have been sold off, including the company's principal ship and the detailed database of underwater shipwreck sites.

Gordon, 56, joined Odyssey Marine in 2005 after getting his MBA, starting several tech companies and selling one to the Rockefeller family business. He then decided it was time to follow his passion for the ocean. He grew up in northern New Jersey watching Jacques Cousteau specials. He learned to dive at the Jersey shore and got good enough to train law enforcement agencies. For fun, he went diving at offshore shipwreck sites between New York and North Carolina.

He joined Odyssey 11 years ago after meeting its free-wheeling, charismatic co-founder, Gregg Stemm. Gordon was named CEO in 2014. Stemm, a past CEO, remains chairman.

As a young amateur boxer, the compact Gordon learned the value of taking a punch. Odyssey, he says, has taken plenty of punches and is still on its feet.

"As we sit here," he told me, "with one of our lowest capitalization rates ever and an awful stock price, most people are counting us out."

Then Gordon counterpunches: "I really believe we are on the verge of greatness and have the ability to stay in the game long enough to see if I am right."

• • •

The "game" Gordon is talking about is a new direction for Odyssey. Yes, the company will keep a modest hand in shipwreck salvage as a for-hire company for other treasure hunters willing to foot pricey upfront costs. But Odyssey is betting its bottom line now on different treasure — potentially worth billions to those who can find and retrieve it — on the ocean floor. That treasure includes phosphates used in fertilizer, rare metals, key minerals and deposits of copper, gold, silver and zinc found in clusters known as massive sulfides.

To Gordon, the emerging market of underwater mining is a lot like the oil industry. After exhausting large portions of accessible oil on dry land, oil explorers by the 1970s had turned to the oceans to drill and meet energy demands.

"We will see a similar arc in minerals and mining," Gordon predicts. The CEO hopes it also translates to a renaissance for Odyssey, whose unique skills still enable it to find valuable commodities on the ocean floor. First up: phosphates — an inorganic compound that has been mined for many decades in Central Florida. The supply, critical to making fertilizer that helps feed the world, is not inexhaustible.

Odyssey is working with Mexico on a major deposit of phosphates in water shallow enough to allow the deposits to be mined economically.

The so-called "Don Diego" phosphate deal hit a snag earlier this year when Mexico objected to mining the site for environmental reasons. Gordon says Odyssey is working to resolve the impasse. But the delay has not helped Odyssey's effort to transform itself from their Pirates of the Caribbean image to a more serious one of ocean floor commodity explorer.

"This is a new application of our existing core competency," says Gordon. "Once we get over the first finish line with this project, the second and third will be easier to do. We will have more credibility."

And phosphate is a good start. "Everyone needs to eat," he says. "This is not some luxury item."

The timing for Odyssey is good. The low price of oil has many exploration ships begging for work and cheap to lease. Odyssey's proprietary scanning technology — its bread and butter asset — lets it track what's on the ocean floor and is easily attached to the hull of ships.

And Odyssey will use that tech to build a detailed ocean floor map of potential treasure, just as it did before. The company once pinpointed nearly 10,000 shipwrecks under the water but determined only about 100 likely had sufficient riches aboard to make an expensive salvage worth the risk. Now Gordon and his team will map parts of the oceans where valuable minerals, metals and other materials may be worth the effort to mine.

"The methodology is the same," Gordon says. "This goes to our founders' original vision: Where are those billions of dollars of interesting things on the ocean floor and how can we arrange to recover them and create value?"

• • •

As a manager, Gordon likes the new business more than loosey-goosey treasure hunting. Most of the rules governing underwater mining already exist. Odyssey probably won't run into debilitating legal battles over phosphate mining like it did with Spain over who owns the Black Swan.

The CEO also likes the potential returns of recovering underwater mineral deposits.

"The value creation has the potential to be orders of magnitude larger," he says. "One deposit could be worth more than our top five shipwrecks."

Maybe. But will Odyssey ever be as cool as it once was? Will it lose its mystique as one of Tampa Bay's most exciting enterprises?

"Maybe we are a sleepy little company now," Gordon says, "but I think we still have a cool factor.

"I think we will crack the code on this. Years from now we may look back at this conversation and say, 'Yes, it was just like the offshore oil opportunity.' "

Gordon admits it has been a difficult couple of years, downsizing and selling assets. But the survival instinct is strong.

"We are a resilient organization," he says. "If you can survive 22 years with no visible means of support like general earnings and things like that, well that's probably a core competency."

Then Gordon speaks directly to me. "I look forward to the day you will be able to write a flowery headline about how great we are doing, and my wife won't be upset when she reads the paper."

Contact Robert Trigaux at [email protected] Follow @venturetampabay.

     
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