12 January 07 The Business Times by Ronnie Lim
THE current slide in oil prices - which plumbed a 19-month low to below US$53 yesterday - has not hurt oil rig refurbisher KS Energy and oilfield equipment suppliers SSH Corp and Aqua Terra Supply, said Indonesian tycoon Kris Wiluan.
On the contrary, the trio's spanking new JV Batam yard is seeing its first customers comprising three Indonesian land rigs which are in for upgrading. Mr Wiluan, speaking at a briefing yesterday on SSH's interim results, said that so far, he has not detected any slowdown in regional oil and gas activities, adding that their business will not be impacted 'as long as oil prices don't fall below US$30.'
'The order books of Singapore yards are filled until 2010 and their rig projects are still on, even if oil prices are down. The refineries are experiencing some slowdown, and will take this opportunity to do maintenance, while new petrochemical investments by Shell and ExxonMobil are opening up huge business potential.'
'Indonesia has thousands of oil wells, and as long as oil stays above US$25, a lot of mature rigs there will be ripe for upgrading work so that they can re-exploit older wells,' he added. This spells opportunities for companies such as SSH which supply equipment like steel plates to the industry.
SSH - of which he is chairman and CEO, after his acquisition of a 29.2 per cent stake in September 2005 - reported a 54 per cent rise in revenue to S$77.5 million and a 64 per cent increase in net profit to $8.3 million, for the half year ended Nov 30, 2006. It is paying an interim dividend of 0.55 cent per share.
'SSH is progressing well,' he said of his long-term plan to integrate the Singapore trio so that they can better network with his Indonesian Citramas Group, including Jakarta-listed drill-pipe supplier PT Citra Tubindo (PTCT), to take on not just regional deals, but also projects further afield in China and the Middle East.
Asked about the possibility of a merger of the three listed entities - KS Energy Services, Aqua-Terra Supply Co and SSH - Mr Wiluan said that this is a consideration that is under study.
As part of this bigger plan, ATS yesterday said it is proposing to buy a 75 per cent stake for HK$15.75 million in Hong Kong-based Raymonds Supply Co which supplies oil and gas equipment to the Chinese market.
On the new JV rig yard which the Singapore trio have with PTCT in Batam, he said it is in the process of securing all the regulatory approvals before the yard's official opening next month.
'There is a shortage of land rigs, with a waiting time of two years, so the quickest way to get a well working is to refurbish or upgrade the older rigs,' he said, adding that the potential market will be the 180 Indonesian rigs in need of such work.
Mr Wiluan, however, was reluctant to disclose at this point the value of the current three upgrading contracts in hand, saying this was still being nailed down. 'But it could range from below US$5 million to between US$10 million and US$15 million for each,' he told BT.