This article first appeared in The Edge Financial Daily, on October 22, 2015.

KUALA LUMPUR: Oil and gas (O&G) service provider Barakah Offshore Petroleum Bhd is scouting for acquisition opportunities in Malaysia and abroad to improve its capabilities in order to better compete with its bigger peers, said its founder and executive chairman Nik Hamdan Daud.

He said the group is looking to acquire technology-based companies that will provide post-acquisition synergies and at the right price.

“We are still looking for a suitable target and thus, there isn’t anything to disclose for now,” Nik Hamdan told reporters after the signing of a memorandum of understanding (MoU) between Barakah’s wholly-owned subsidiary, PBJV Group Sdn Bhd, and Hilong Marine Engineering (Hong Kong) Ltd (HMEL), a subsidiary of Hong Kong-listed Hilong Holding Ltd.

Nevertheless, Nik Hamdan said the group may need more time to evaluate acquisition candidates amid a slowdown in the local O&G industry. In view of the lower oil prices, Barakah is also cautious about its capital expenditure (capex).

“We try not to spend too much on capex,” said Nik Hamdan, adding that the group’s capex is always tied to secured contracts.

The group’s current order book stands at RM1.7 billion, which is expected to keep it busy for the next three years. It is also bidding for RM1 billion worth of contracts. On its earnings outlook for the financial year ending Dec 31, 2015 (FY15), Nik Hamdan said the group is “still feeling the pinch of the current economy” and thus, is not expecting a significant increase.

“We are looking at doing certain cost reductions to increase our efficiency,” he said, ruling out lay-offs.

For the six months ended June 30, 2015, Barakah saw its net profit fall 9.3% to RM19.76 million from RM21.78 million a year ago due to lower revenue and increased fixed operating costs.

Earlier at the MoU signing ceremony, Barakah teamed up with Hilong Holding to explore prospects for offshore transportation and installation projects for platform heavy lifts and pipelay, as well as full engineering, procurement, construction, installation and commissioning works for offshore O&G field development projects in Malaysia.

HMEL is the owner of a 3,000-tonne derrick pipelay barge Hilong 106. The MoU commenced yesterday and will expire in two years.