EOC Gains $44M Profit in 2Q FY2014, Lifted by Sale-and-Leaseback of Vessel

EOC Limited (EOC or the Group), an associate company of Singapore's Ezra Holdings Limited and a provider of offshore accommodation, construction and production vessels and services to the oil and gas industry, reported a net attributable profit of $44.0 million for the second quarter ended Feb. 28 (2Q FY2014) from $1.4 million in 2Q FY2013, the company said when releasing its quarterly financial results Tuesday.

The surge in net attributable profit was due mainly to a $36.4 million gain arising from the sale and leaseback arrangement for the Lewek Champion pipelay and heavy lift construction vessel although there was also increased contributions from its core operations. The Group's two floating production, storage and offloading (FPSO) vessels - Lewek EMAS and Perisai Kamelia - enjoyed high uptime and lifted EOC's share of earnings from associates to $5.5 million in 2Q FY2014, against $0.2 million in the corresponding quarter in 2Q FY2013.

EOC's revenue in 2Q FY2014 rose 45 percent to $11.5 million, compared to $7.95 million a year ago, supported mainly by increased contributions from project management, engineering and procurement services.

"This robust second-quarter illustrates our efforts to strengthen the Group's balance sheet and financial position. Our net gearing has significantly improved, and we are now in a good position to move ahead to pursue growth opportunities," EOC's Chief Financial Officer Jason Goh said in the company release.

Meanwhile, proceeds from the $200 million sale and leaseback arrangement for the Lewek Champion has enabled the Group to reduce its bank borrowings and strengthen its balance sheet, leading to a reduction in its net gearing to approximately 3 percent as at Feb. 28 from over 100 percent as at Aug. 31, 2013.

"The long-term fundamentals of the oil and gas industry will continue to drive offshore development and production activity and thus demand for our construction and production assets and services. We are confident of leveraging our capabilities to build on our position in the accommodation and support market segment," Goh said.