Scomi Energy (Scomies)/Scomi Bhd

Word has that Standard Chartered Private Equity, which is the second largest shareholder in the company, is looking to dispose of its 11.48% block in Scomies.

Together with the company’s parent – Scomi Group, they collectively control over 77% of Scomi Energy, a provider of services to the oil and gas and marine industries.

Notably, Scomi Energy chief executive officer Shah Hakim @ Shahzanim Zain had also been actively buying up shares in the firm in the May to June period, holding a direct stake of 0.09% at last look.

Scomi Energy, which not too long ago was only focused on marine services, involved specifically in coal transporting in Indonesia, has an extensive portfolio to offer to investors. The enlarged entity now encompasses drilling fluids, drilling waste management, production enhancement; and offshore support and marine logistics vessels.

The merger of all of its oil and gas (O&G) units also puts the company on a stronger financial footing, allowing it to “aggressively” participate in the industry.

Recall, its parent Scomi Group Bhd had in March 2013 completed its restructuring exercise which saw all its units involved in the O&G business consolidate under one entity - Scomi Energy.

Started in February 2012, the exercise saw the disposal of Scomi Oilfield Ltd, Scomi Sosma Sdn Bhd and Scomi KMC Sdn Bhd by Scomi Group to Scomi Energy.

It also involved an internal restructuring of legal entities within the oilfield services for oil field services in the Eastern Hemisphere business to fall under Scomi Energy; and also a capital repayment within Scomi Energy to its shareholders.

Scomi Energy reported a net profit of RM20.1mil on revenue of RM283.2mil for its latest quarter ended March 31.

Based on the latest financials, its net gearing is about 0.3 times.

The Eastern Hemisphere which includes Asia and the Middle East and which is where Scomi Energy is in, is set to see exciting growth in the oil and gas industry. These are the regions where it is active in with the streamlining of its business.

From mid 2012 it had already won several major contracts in Qatar, Indonesia, Turkmenistan, Myanmar as well as locally. It will continue to actively pursue contracts especially in Thailand, Indonesia and India.

Scomi Energy’s current drilling orderbook is at RM5bil.

Over the next couple of years however, it is setting its eyes on contracts worth some RM1bil even as it focuses on the execution of its existing contracts.

In Malaysia, drilling activity will intensify due to enhanced oil recovery, marginal field development and exploration. The Government’s effort in increasing oil and gas production forms a strong foundation for offshore drilling activities.

Scomi Energy will be one of the main beneficiaries given its 50% market share in drillling fluid and drilling waste management business in Malaysia. Addressable drilling waste market size for Scomi Energy is estimated to be US$2.1bil (RM6.7bil) this year.

Margin of its oilfield projects currently (July 2013) contribute the bulk to company revenue at more than 80%.

The restructuring has allowed the company to optimise its operations and to share resources, resulting in a very lean and flat organisation.

In terms of Scomi Energy’s expansion plans, it has continued to grow its facilities with increased storage at its Liquid Mud Plant in Kemaman and also recently over a period of several months, it completed outfitting its Liquid Mud Plant in Indonesia. 

For the marine services, the focus is on offshore support services (OSVs) and looking at a fleet revitalisation plan with new builds and acquisition of vessels. Scomi Energy embarked on a joint-venture with shipping firm Freight Management Holdings Bhd to jointly acquire, own and operate marine vessels.

The company’s plan to buy more OSVs is synergistic to the drilling business as the vessels are required to transport the drilling fluids and conduct other drilling-related services.

Its knowledge and expertise in the marine industry with the drilling fluids and drilling waste management segments is opening up vast opportunities to further” bundle” its services and to explore innovative solutions for its clients.

Currently, it owns 75 tugs and barges and 11 offshore support vessels.