Nam Cheong inks 3 US$51.5mn deals

Contract wins of S$274mn surpass last year’s figure.

Nam Cheong Limited (“Nam Cheong”), SGX Main Board-listed Malaysian-based leading global Offshore Support Vessel (“OSV”) shipbuilder that focuses on the construction and engineering of complex, sophisticated and environmentally-friendly OSVs, today announced that Nam Cheong Offshore Pte Ltd and Nam Cheong International Ltd, both wholly-owned subsidiaries of Nam Cheong, have respectively sold two 3,000 dead weight tonne (“dwt”) Platform Supply Vessels (“PSVs”) to Bumi Armada Navigation Sdn Bhd and a 5,150 brake horsepower (“bhp”) Anchor Handling Towing Supply (“AHTS”) vessel to Gulf Glory Marine Services LLC. The contracts are worth a total of US$51.5 million (approximately S$66.8 million).

The contracts boost Nam Cheong’s order wins this year to 12 vessels at a total value of RM673 million (approximately S$274 million), which surpassed last year’s order win of 10 vessels at a total value of RM505 million.

The two PSVs and the AHTS are being built as part of the Group’s built-to-stock series in one of Nam Cheong’s subcontracted yards in China. The 3,000dwt PSVs are each 75 metres long and equipped with Dynamic Positioning 2 system. The ABS Class PSVs are to be delivered between the end of 2011 and mid-2012. 

The 5,150 bhp AHTS vessel, also ABS Class, is 59 metres long and has a bollard pull of 62 tonnes. It is expected for delivery in mid-2012. 

Together, Nam Cheong has made eight vessel sales in just over two months. Today’s announcement follows closely from last week’s joint venture agreement with three major oil and gas service providers in the region that resulted in the sale of a multi-purpose support vessel with a contract value of RM88.0 million (approximately S$35.8 million2). In late August, the Group secured a contract for a 5,220bhp AHTS vessel and in late July, it nabbed contracts in an en-bloc sale for three 5,150bhp AHTS vessels. 

“We are delighted that we have surpassed last year’s order wins,” said Mr Leong Seng Keat, Nam Cheong’s Executive Director. “The stream of order wins that Nam Cheong has experienced in the past two months confirms again our market prediction for a continued demand for AHTS vessels and a rising demand for PSVs. Momentum for the offshore marine industry remains brisk, especially in Malaysia, as oil prices remain high and oil majors continue to invest in exploration and production (“E&P”) activities in the region.”

Mr Leong continued: “Anything above US$55 a barrel in oil prices is very comfortable for oil majors to continue to deploy assets in shallow water. That’s why we continue to see demand for smaller AHTS vessels that is driven by shallow water oil and gas activities. But at the same time, we are catering to future expansion of activities in deeper waters with our PSV builds.”

Of the current 106 marginal oil fields in Malaysia – which are estimated to contain 580 million barrels of oil – 27 are being developed by Petronas, the country’s national oil company. This has spurred investors’ interest in the country’s offshore resources and created a robust environment for new oil and gas activities, according to a Nam Cheong report. 

The sale of the two PSVs to Bumi Armada, represents Nam Cheong’s second sale to the country’s largest owner and operator of OSVs this year. The Group’s first PSV was sold to Bumi Armada in April 2011, before the Group listed on the Singapore Exchange on May 27, 2011. Both Bumi Armada and Gulf Glory Marine Services, a United Arab Emirates-based company that owns and operates a large fleet of offshore support vessels, are part of Nam Cheong’s established blue-chip customer base. Nam Cheong has had more than 20 years of relationship with Bumi Armada and has established slightly more than a year of relationship with Gulf Glory Marine Services. 

“We are also grateful that our existing customers continue to work with us despite the market volatility and global economic uncertainties,” said Datuk Tiong Su Kouk, CEO and Executive Chairman of Nam Cheong. “The confidence that our customers have in us speaks volume of our four decades of track record and experience, which is backed by a sound business model.”