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Malaysia’s Coastal Contracts explores expansion to South America

Malaysia’s Coastal Contracts explores expansion to South America
Coastal Contracts, Malaysia’s OSV fabricator and emerging jack-up rig player, is mulling the prospect of establishing a local presence in South America in the second half of this year, according to Ng Chin Heng, the company’s executive chairman.

The South American venture followed the company’s recent inroads made in Mexico, where it sold two OSVs to new customers in Mexico.

“To this end, we intend to ramp our marketing efforts in the South America by leveraging on recent inroads made in Mexico. We are currently exploring opportunities to establish a local presence in South America in the second half of 2015, in order to pursue the expansion of both our OSV sales and oil and gas division in the region,” Ng commented.

“While ongoing market uncertainties may pose a slowdown in new OSV orders in the year ahead, we constantly pursue potential growth areas in order to strengthen our revenue base as well as ensure long term business sustainability,” he added.

In January this year, Coastal Contracts had incorporated a subsidiary in Mexico – CoastOil SA de CV – to undertake the leasing of offshore oil and gas assets, as well as the provision of oil and gas drilling, engineering and other ancillary services.

Ng revealed the South American venture as the Kuala Lumpur-listed firm announced an improved set of first quarter results.

First quarter net profit for the three months ended 31 March 2015 was recorded at MYR65.91m ($18.39m), up 34.1% from MYR49.16m posted in the same period of last year.

Revenue during the quarter also rose 56.2% year-on-year to MYR350.95m due mainly to increased delivery of OSV newbuilds, as well as an enhanced product mix comprising higher-value OSVs.

The group’s total orderbook stood at MYR3.2bn, of which the fabrication of OSVs and other vessels accounted for MYR1.1bn, while the oil and gas division took the remaining orders of MYR2.1bn.

The group’s OSV newbuildings are slated for delivery until 2017, while its second jack-up rig is under construction and targeted for completion in the last quarter of 2015.

“We are committed towards securing a charter for our second jack-up rig, and are in talks with several potential clients. We hope to land a favourable charter contract in the near term,” Ng said.

The first jack-up rig was sold to a major oil firm for MYR807m in April this year and it will be delivered to the customer during the third quarter.