Mermaid Marine gasps for air in $470m contracts backlog

It hopes to ride out volatility and come out strong.

Mermaid said during its post-results briefing today that the current oil-price slump is nowhere as severe as the economic crisis of 2008.

The company cites still-healthy credit markets and energy demand and the current disequilibrium has been caused by oversupply. It believes it can ride out the volatility and emerge a stronger player by snapping up distressed assets or companies that may emerge.

According to Maybank Kim Eng, some 75-80% of its USD470m backlog is from NOCs and low-cost Middle East clients who intend to maintain production. These clients have stringent requirements and tend to be sticky.

While it cannot rule out cancellations, Mermaid says clients like Saudi Aramco have never cancelled or renegotiated contracts in the past 40 years on crisis grounds. With Saudi Aramco, it has a USD530m subsea IRM contract and three jackup rig contracts.

Maybank Kim Eng adds that Mermaid has demonstrated its confidence by chartering in more vessels for Middle Eastern jobs and a highend DSV for 5+5 years of work in cabotage-protected Indonesia.

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