This article first appeared in The Edge Financial Daily on March 2, 2018

KUALA LUMPUR: Handal Resources Bhd and Uzma Bhd have bagged a three-year umbrella contract from Petronas Carigali Sdn Bhd for the provision of hydraulic workover units (HWUs).

In separate filings with Bursa Malaysia yesterday, Handal and Uzma said the umbrella contract was awarded to their respective subsidiaries Handrill Sdn Bhd and Uzma Engineering Sdn Bhd (UESB) for the provision of the HWUs.

“The umbrella contract does not constitute a commitment to any specific work. The execution of the umbrella contract is dependent on work orders to be issued to UESB from time to time at the discretion of Petronas Carigali,” said Uzma.

“As such, there is no firm value for the umbrella contact,” it added.

The umbrella contract will commence from February for a period of three years, with a one-year extension option. It is also conditional upon Handrill and UESB obtaining and maintaining a valid licence with Petroliam Nasional Bhd.

The contract is expected to contribute positively towards both the companies’ earnings and net assets for the duration of the umbrella contract.

“The execution of the contract is dependent on work orders to be issued by Petronas Carigali from time to time. It is the prerogative of Petronas Carigali to decide the timing on the requirement of services,” said Uzma.

“Hence, any delay in issuing work orders will lead to a delay in revenue recognition. However, the group has a full-time team monitoring the request from Petronas Carigali,” it noted.

In a statement, Handal group managing director and chief operating officer Mallek Rozal Mohsiin said with the rise in crude oil prices recently, the group is optimistic about seeing higher demand for various supporting services and equipment going forward.

“In this regard, we are well-prepared and have the capacity to target more future opportunities from the major oil and gas (O&G) players in Malaysia,” he said.

“Furthermore, this award presents Handal’s long-term strategy in diversifying its income base during the current challenging period of the O&G industry.”