Thailand's Mermaid Maritime Raising $500M for Offshore Marine M&A
Thailand-based Mermaid Maritime Public Company Ltd. is in discussion with several banks over a mark-to-market bond issue to raise up to $500 million for merger and acquisition opportunities within the offshore marine sector in the next five years.
Mermaid’s CEO Chalermchai Mahagitsiri said the Singapore-listed outfit is well-placed, with a net debt to equity ratio of just 0.2, to enter into the bond market to raise cash for opportunistic acquisitions.
Mermaid Targets Firms with Track Records
Without identifying any specific acquisition targets, Chalermchai said these would include companies with track records in countries that “Mermaid is looking to secure charters in”.
Source: Mermaid Maritime
Mermaid does not have any immediate plans to invest in newbuild rigs but has instead been focusing on securing charters for a pair of tender assist rigs currently being built by China Merchant Heavy Industries Co. (CMHI), Chalermchai explained.
However, the Mermaid CEO believes unlike other drilling asset classes, including jackups, tender assist rigs will be viewed positively even in a lower oil price environment given their more competitive operating day rates.
Each Mermaid tender rig, costing $149 million, has 50 percent larger deck and storage areas and can accommodate up to 200 persons.
Chalermchai said the two rigs at CMHI are being marketed for work among others, off Thailand.
With the delivery of the CMHI newbuilds coming up in 2016, Mermaid is considering divesting the 1978-built MTR-1 accommodation barge although the firm intends to continue operating the vessel. MTR-1 is being tendered for a two-year contract starting from March 2015 off Indonesia.
Mermaid is weighing contract options for the second tender rig in its operating fleet, MTR-2, which is now working on reduced operating rates for Chevron Corp. while waiting on a permit to enter full-fledged drilling operations off Balikpapan, Indonesia.
Chalermchai also clarified there is no plan in the near future to place newbuild orders for jackups beyond the three units – AOD I (400’ ILC), AOD II (400’ ILC) and AOD III (400’ ILC) – owned by Mermaid’s 33.76 percent-owned Asia Offshore Drilling Ltd although he does not rule out any acquisition possibilities.
All three AOD jackups, which entered into service with Saudi Arabian Oil Company (Saudi Aramco) upon delivery last year, each has a fixed three-year term charter plus option to extend for a further year.
Bullish about Subsea Business
While its executives refrained from commenting on its fleet building plan for the subsea division, Mermaid is clearly more upbeat on the prospects of the “production side” business.
Citing data from Strategic Offshore Research, Mermaid flags a shift towards subsea services in the next wave of demand following exploration boom in recent years.
Mermaid Offshore Services executive director, Paul Whiley confirmed the subsea business unit has entered into a five-year charter for dynamic position 2 (DP2) subsea operations vessel Windermere now owned by Miclyn Express Offshore Ltd. (MEO).
MEO bought Windermere from Singapore-based Hallin Marine, which recently announced its intent to exit from the offshore market.
Whiley views the charter-in arrangement as particularly a good avenue to penetrate cabotage markets such as Indonesia.
Mermaid has three other Indonesia-flagged charter-in vessels – DP2 dive support vessel, Mermaid Nusantara; DP2 remotely operated vehicle (ROV) and air dive support vessel, Endeavour; and DP2 ROV and air dive support vessel, Resolution – on its 12-strong operating fleet.
Three other charter-in vessels are DP2 construction Mubarak Supporter, DP3 multi-purpose subsea support vessel Bourbon Evolution and DP3 subsea construction vessel Siem Daya 2.
Mubarak Supporter is contracted on a lump-sum basis off the Middle East for subsea cable lay and flexible pipelay support operations.
Mermaid has three owned vessels – the DP2 ROV and air dive support vessel, Mermaid Sapphire, offshore support vessels Barakuda and Mermaid Challenger. In June, Mermaid unveiled a $19 million call-off contract for ROV support vessels including Mermaid Sapphire through 2016 in the Gulf of Thailand.
The Thai outfit had a busy season earlier in the financial year near its home base, having mobilized four vessels, including Mermaid Commander and Sapphire for hook-up and commissioning at a multi-platform development.
The Thailand-based offshore marine player is expecting to take delivery in 2016 of a newbuild vessel being constructed under a contract worth $138 million awarded to CMHI.
The MT6024 Norwegian design vessel – to be named Mermaid Ausana – will be equipped with an 18-man twin saturation diving system, ROV and construction capabilities. Ausana is understood to have been pitched for a contract in East Africa, possibly with Anadarko Petroleum Corp. offshore Mozambique.
Mermaid Records Higher Profits
Mermaid tripled its profit on-year to $45 million for financial year ended Sept. 30.
Chalermchai attributes the dramatic increase in Mermaid’s bottomline to the start-up of the three AOD jackups.
However, subsea division continues to account for 98 percent of Mermaid’s $470 million order backlog, compared to a 2 percent contribution from the drilling business.
A large majority of Mermaid’s subsea order book is understood to comprise contracts from national oil companies, which the Thai outfit has consciously built over the last few years.
This provides a cushion against announced exploration and production cuts among supermajors and large independents.
About 60 percent of Mermaid’s subsea contracts come from brownfield projects.
Mermaid has long-term charters on hand with Saudi Aramco, which is embarking on extensive re-development on ageing offshore platform and pipeline infrastructure in the mature Persian Gulf.
Greenfield projects make up the remaining 40 percent. Mermaid is understood to be supporting PTT Exploration and Production Public Company Ltd.’s and Chevron’s extensive developments involving the ongoing installation of close to 100 wellhead platforms in Thailand.
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