Perdana Petroleum eyes turnaround, better years ahead

by **Cals** Sat 24 Aug 2013, 23:37

Published: Saturday August 24, 2013 MYT 12:00:00 AM
Updated: Saturday August 24, 2013 MYT 7:29:11 AM
Perdana Petroleum eyes turnaround, better years ahead

2015 is the year to watch for Perdana Petroleum Bhd.
By then, the offshore supply vessel (OSV) owner and operator will have taken delivery of all its new vessels and see full-year contributions from the six ships that recently secured long-term charters with major shareholder Dayang Enterprise Holdings Bhd worth a combined RM705mil.
From a loss of RM3.7mil last year, analysts are projecting a return to profitability for Perdana Petroleum to RM50mil-RM60mil this year, and thereafter a leap to RM70mil and RM90mil in 2014 and 2015.
This is not an impossible task for the marine vessel charterer, which has been profitable for five quarters now and won some RM1.2bil in new jobs since the start of the year.
Offshore maintenance services concern Dayang, Perdana Petroleum’s single-largest shareholder with a 25% stake, was among the biggest winners of the RM10bil Pan Malaysia hook-up and commissioning (HUC) and topside maintenance umbrella contracts doled out by Murphy, Shell, and Petronas Carigali. Some RM3.3bil to RM4.1bil of those works went to Dayang.
OSV players the world over are emerging from a three-year slump that followed the global financial crisis of 2009-2009, when daily charter rates plunged from a peak of US$2.20-US$2.70 per brake horse power (bhp) to a low of US$1/bhp.
Riddled by overbuilding, a credit crunch and the reining in of exploration and production budgets, OSV firms were consigned to the scrap heap in droves. Those who survived grew accustomed to seeing red in their balance sheets.
The worst of times behind them, daily charter rates have since rebounded to US$1.80/bhp-US$2.20/bhp and utilisation closer to 80% from below 50% in the troubled years.
The gap between current oil prices of above US$100 per barrel and the hurdle rate – the breakeven cost for oilfield operators – of US$40, according to the International Energy Agency, has also given fresh impetus for oil firms to hammer out better terms and longer tenures with vessel providers.
For Perdana Petroleum, whose fleet primarily consists of mid-sized anchor-handling tug supply (AHTS) ships, as well as work barges and work boats, this was enough reason for it to expand “aggressively” over the past 12 months, during which time it snapped up 5 vessels, executive director Datuk Henry Kho tells StarBizWeek in an interview.
Perdana Petroleum has 15 ships at its disposal, with one set to be delivered in the fourth quarter of this year and two more next year, taking its OSV count to 18.
While declining to share more details on its fleet expansion and the cost it might involve, Kho says: “We will not stop here. We are still looking at what the market needs. The vessels we have acquired are mostly for brownfield and maintenance jobs, and that will be our focus moving forward,” he explains, adding that Perdana Petroleum is eyeing HUC and enhanced oil recovery work.
Industry observers point out that a cyclical recovery in the OSV sector finally took hold in the second quarter of this year, as can be observed in the earnings scorecards of listed OSV companies such as Perdana Petroleum and Alam Maritim Resources Bhd this week. Both of them logged better charter and utilisation rates for the April to June period, as well as healthier bottomlines.
Analysts say the recovery is still nascent and has legs to last at least another two years, backed by Petronas’ five-year, RM300bil capital expenditure programme.
Meanwhile, Kho indicates that all of Perdana Petroleum’s newbuilds have secured contracts, even its newest purchase of a work barge from Nam Cheong in July.
Maybank IB Research also says in a report dated August 20 that a second wave of OSV awards is imminent, with tenders being called for 18 vessels worth between RM1.4bil and RM1.5bil.
Four production-sharing contractors (PSC) – Petronas Carigali, Shell, Lundin and Murphy – were understood to have issued separate invitations-to-bid for 18 ships, comprising 14 AHTS and four platform supply vessels, the brokerage says.
However, Maybank IB Research estimates that only five to seven vessels are available for work locally next year.
Kho confirms that Perdana Petroleum will throw its hat in the ring, but says the firm does not have much spare capacity left.
Already, 73% of its fleet is locked into long-term hires, with only four left on spot charters. It has an orderbook of RM1.3bil, but a tenderbook of only RM400mil.
“We are quite confident of putting them (the four vessels) on long-term charters, which is between one and three years. At the same time, we don’t want all our ships to be tied up to five-year charters,” he quips. According to Kho, the results from the latest round of OSV tenders are expected to be known by the end of the year or early next year.
“They (oilfield operators) usually keep some jobs un-tendered. If a PSC requires 10 vessels, it may award contracts for six or seven, and keep the rest on short-term charters. That’s why new tenders crop up now and again.” — By JOHN LOH