KUALA LUMPUR (May 19): UMW Oil & Gas Corp Bhd's (UMW O&G) chief said support service providers in the industry could not afford to be "choosy" as lower crude oil prices led to fewer contracts in the market.
UMW O&G (fundamental: N/A; valuation: N/A) president Rohaizad Darus said the number of contracts available had declined by 30% compared to a year earlier.
"Service providers in the oil and gas industry now cannot be choosy about the work they take," Rohaizad told reporters after UMW O&G's annual general meeting here today.
Despite the current industry backdrop, UMW O&G remained optimistic on its prospects. Rohaizad said the firm was not concerned that the majority of its rigs were under spot charters, which would expire in 2015 as the company had tendered for projects worth RM3 billion this year.
He said UMW O&G had submitted 18 bids involving projects in Malaysia besides South East Asian and Middle Eastern countries to ensure the company's rigs were kept busy.
The RM3 billion worth of bids compare with the company's RM1.8 billion order book, which is sufficient to sustain the group's financials until 2018.
"Four out of seven of the company's rigs are currently in spot charters, which will expire in 2015.
"We will be happy to be able to keep our order book at RM1.8 billion at the end of this year to replenish what has been burnt," he said.
At 12.30pm, UMW O&G shares fell two sen or 1% to RM2.04 for a market capitalisation of RM4.41 billion.
The stock had fallen 13% this year, underperforming the FBM KLCI's 3% rise.
(Note: 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.)