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Thursday, April 23, 2015

Coastal Contracts secures RM807mil job

PETALING JAYA: Coastal Contracts Bhd has bagged a contract worth RM807mil for the sale of a jack-up drilling rig, boosting its orderbook to RM3.26bil.
The offshore support vessel fabricator and emerging jack-up oil rig player said in a filing with Bursa Malaysia yesterday that the contract had been secured by its wholly owned subsidiary, Thaumas Marine Pte Ltd. Coastal Contracts, did not reveal details of the purchaser.
“The jack-up drilling rig was sold to a reputable oil company,” it said, adding that the sale of vessels and the jack-up drilling rig constituted RM1.11bil and RM0.81bil, respectively, of its orderbook.
“The balance orderbook comprised RM1.34bil for the group’s first jack-up gas compression service unit charter contract for Petroleos Mexicanos.”
Coastal Contracts added that the jack-up drilling rig is expected to be delivered by the third quarter of 2015.
“Consequently, the revenue stream from the jack-up drilling rig is expected to contribute positively to the top and bottom line performance of the group for the financial year ending Dec 31, 2015,” it said.
In the same statement, Coastal Contracts executive chairman Ng Chin Heng said with the sale of the jack-up drilling rig, the company’s cumulative sales orderbook was further increased to a high of RM1.92bil.
He added that this was balanced with the company’s long-term charter contract for the jack-up gas compression service unit in Mexico.
“Amid low oil prices, the offshore drilling industry is facing rough times, as most of the oil majors have reduced their drilling budgets and are looking to cut costs, leading to less exploratory endeavours and a drop in demand for offshore drilling rigs.
“The decision to sell our first jack-up drilling rig was in order to reduce the company’s exposure to a potential downturn in the drilling market,” said Ng.
He said the sale of the jack-up drilling rig was a positive move in the current market environment, adding that it showed the management’s prudence in avoiding unmanageable risks to the group.
“On our second unit of jack-up drilling rig, we are in the midst of negotiating a drilling contract with potential charterers,” he pointed out.
Ng said construction of the second jack-up drilling rig was progressing smoothly and is expected to be completed by the fourth quarter of 2015.

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