Maritime





Monday May 12, 2008

Oil price a boon to Alam Maritim

By SHARIDAN M. ALI


ALAM Maritim Resources Bhd, an oil and gas (O&G) service provider, expects the current high oil price will fast track more oil production and exploration projects.

Managing director Azmi Ahmad told StarBiz that accelerated production and new oil explorations would translate into more offshore O&G-related contracts being dished out by oil majors.

“The boost in oil projects will need extra support services like offshore support vessels (OSVs), which augurs well with our business,” he said.

Asked whether the hike in oil price will increase the company's operating cost, Azmi said that as most of Alam Maritim's vessels were on time charter agreements, the operating cost inclusive of diesel was borne by its clients.

"The boost in oil projects will need extra support services like offshore support vessels"- AZMI AHMAD

“Furthermore, operating our own vessels is different from third-party charter. We still maintain a 35% to 40% gross profit margin,” he said.

Alam Maritim owns 22 OSVs and expects to expand its fleet this year with the addition of 11 vessels.

He added that Alam Maritim also did third party charter with only seven vessels at any one time.

“We manage to get a 15% to 19% gross profit margin on third-party charter,” he said.

On other operating costs, namely labour and insurance, Azmi said there were no sharp increases in wages and premiums.

“Although there have been some increases in insurance premiums for the past two years, we still enjoy relatively low premiums as we insure our vessels on a group basis.

“As far as labour cost is concerned, 90% of our workforce is Malaysian and we pay them accordingly in ringgit,” he said.

Affin Investment Bank, in its company update dated May 7, said that in view of the current high oil price, it had lowered Alam Maritim's earnings forecast for the financial years (FY) ending Dec 31, 2008 and 2009, by 9.7% and 11.5% respectively.

The research house's current forecast of Alam Maritim's net profit for FY08 stands at RM78mil and for FY09 at RM101mil.

“Given the robust crude oil price and hence increasing demand for skilled O&G manpower, we expect its labour cost (especially the skilled workers operating the higher horse power vessels coupled with dynamic positioning technology) to increase accordingly,” it said.

The research house also believed that spare parts and labour charges during its normal dry docking maintenance would also be higher with the recent steep rise in steel prices.

“These external price pressures are expected to increase the operating cost of the company and other offshore marine support services providers,” it said.

Despite the earnings downgrade, Affin Investment Bank said, Alam Maritim would remain a favourite due to its young fleet of vessels and its technical expertise in underwater services that bode well with growing deepwater O&G activities.

  • E-mail this story
  • Print this story