SILK

An oil concessionaire and Malaysia’s second largest offshore supply vessel owner SILK is poised to win a tender called by Petronas for medium to large OSVs.

Petronas issued the invitation to bid in Dec 2013 and requires ships big enough to operate in and pull rigs in deep waters.

SILK owns 21 ships of which three were ordered in March 2013.

While other OSV operators like Perdana, Icon Offshore and lama may also participate in the tender, industry observers noted that these companies are not as well equipped as SILK.

Should SILK clinch the OSV contract, it will most likely be a catalyst for SILK, which depends on its oil and gas division to boost its earnings.

Its oil and gas division is the main contributor to the group’s total revenue accounting for some 80%.

Moving forward, the group expects its 37km Kajang SILK Highway to continue to record accounting losses as the existing high financing and amortization costs weigh it down. Nevertheless, an increase in traffic volume and the paring down of its borrowing costs will ensure its losses decline.

The group’s highway division is expected to remain cash flow positive as a result of the restructuring of the company long term debt undertaken in 2008. As part of the restructuring, SOIL ventured into oil and gas support services with the acquisition of AQL Aman Sdn Bhd the holding company of Jasa Merin which is the company bidding for Petronas contract.