Friday 29 Mar 2024
By
main news image

KUALA LUMPUR: Shipbuilder Coastal Contracts Bhd has secured a sale order for one unit of jack-up drilling rigs to a “reputable” oil company for RM807 million.

Coastal Contracts (fundamental: 2.6; valuation: 1.8) told Bursa Malaysia that its wholly-owned subsidiary Thaumas Marine Pte Ltd secured the order yesterday, and is expected to deliver the rig in the third quarter of 2015.

The deal is expected to contribute positively to the top and bottom line performance of the group for the financial year ending Dec 31, 2015, according to Coastal Contracts.

“I am pleased to announce that the Coastal group has secured a sale order of its first jack-up drilling rig. With the latest sale, our cumulative sales order book has further increased to a high of RM1.92 billion, balanced with our long-term charter contract for jack-up gas compression service unit (JUGCSU) in Mexico,” Coastal Contracts executive chairman Ng Chin Heng said in a statement.

Currently, the group has a total order book of RM3.26 billion, of which the JUGCSU charter contract for Mexican state-owned petroleum company Petroleos Mexicanos constituted RM1.34 billion; while the balance came from vessel sales and the aforesaid rig sales, which constituted RM1.11 billion and RM807 million respectively.

“The decision to sell our first rig was in order to reduce the company’s exposure to a potential downturn in the drilling market,” Ng explained.

Ng also said the management believes the sale of the jack-up drilling rig is a positive move, given the current market environment.

“On our second unit of jack-up drilling rigs, we are in the midst of negotiating a drilling contract with potential charterers. The construction for the second rig is progressing smoothly and we expect the construction to be completed by the fourth quarter of 2015,” he added.

Coastal Contracts’ share price fell one sen or 0.33% to close at RM3.01 yesterday, valuing it at RM1.6 billion.

coastal_ng_23apr15


The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on April 23, 2015.

      Print
      Text Size
      Share