These new contracts involve the supply of cables for two Anchor Handling Tug Supply ("AHTS") vessels as well as the supply of specialized lighting for two oil rigs.
BH Global will commence the supply of cables to the two AHTS vessels, which are being built by Jaya Holdings Limited by the end of 2006. In the early part of 2006, BH Global has successfully delivered a similar contract for Jaya.
The other new contract is for the supply of specialized lighting products for two oil rigs, which are being constructed by one of the world's largest rig building companies. Besides the supply of lighting products, BH Global will also play a key role in the procurement and logistics management for other electrical equipment for this customer's yard facilities and daily operations.
The prospects for the building of new offshore AHTS vessels globally continue to be very positive. Similar to oil rigs, the majority of the global offshore AHTS fleet was built during the last offshore cycle in the 1970s. Currently, more than 70% of the fleet is more than 20 years of age and this aging fleet is due for replacement. In addition, there is a strong direct link between the growth of AHTS vessels and that of offshore rig platforms, thus the current boom in rig building bodes well for the prospects of AHTS vessels. The replacement program of AHTS vessels is expected to intensify in the coming years, and the related procurement specialists and suppliers like BH Global are well positioned to ride on the expected increase in demand for AHTS vessels.
Despite the recent dip in oil prices, the offshore oil & gas sector remains resilient with major rig builders continuing to announce new orders. Rig utilization has remained consistently high at more than 90% for the past three years while day charter rates for various types of rigs have soared to unprecedented levels. These facts have highlighted the tight global supply of rigs and analysts believe that more orders for rigs are very likely in the coming years. With its expertise and impeccable track record in procuring specialized electrical equipment for customers in the offshore sector, BH Global will benefit from this sustained demand for rigs in the coming years.
Mr. Vincent Lim, Managing Director of BH Global, commented, "We remain optimistic on the outlook for both marine and offshore oil and gas sectors. Based on industry statistics, we expect the global demand for both AHTS vessels and oil rigs to remain strong in the coming years. As our customers embark on their aggressive shipbuilding and rig building programs to meet this surge in demand, BH Global, as a key supporting firm, will benefit from the increase in demand for our marine and offshore electrical equipment. The Group has also received many enquiries about our products and services and we are in active discussions with many potential customers in the oil & gas sector."
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