Nam Cheong Bags $45M Contracts to Supply 2 Newbuild OSVs
Nam Cheong Limited (Nam Cheong, or together with its subsidiaries, the Group), a leading global offshore marine player listed on the Main Board of the Singapore Exchange Securities Trading Limited (the SGX) and Malaysia’s largest Offshore Support Vessel (OSV) builder, announced Monday that it has sold two vessels worth approximately $45 million (approximately SGD 59.5 million).
An Anchor Handling Towing Supply Vessel (AHTS) was sold to a Netherlands-based repeat customer, Vroon B.V., an international shipping company with experience that has spanned more than a century. Nam Cheong also sold a Platform Supply Vessel (PSV) to a repeat customer, E.A. Temile Development Company of Nigeria Limited (Temile) based in West Africa, an established engineering and construction company.
Leong Seng Keat, Nam Cheong’s CEO said: “Despite the recent volatility in global oil prices which has affected investor sentiments across the industry, the securing of these orders from our repeat customers evidently reveals the continued interest in oil and gas activities, our strong reputation in the market for quality and reliable vessels as well as our customers’ confidence in Nam Cheong’s capabilities.”
“We are glad that Nam Cheong has evolved from a regional player into an established global leader in the offshore and marine sector. We have consistently received good responses from customers around the world including Europe and West Africa. This has helped broadened our customer base which lowers our geographical concentration risks, placing us in good stead to weather the fluctuations in oil prices. With the securing of the two orders, our order book remains at a healthy level of $486.5 million (MYR 1.7 billion), comprising a total of 26 vessels.”
Nam Cheong last sold an AHTS to Vroon B.V. in September. A PSV which has similar specifications to the new PSV order, was also sold to Temile in March, marking the third such PSV unit sold to the customer.
Shallow water projects require oil prices to be at $25 – $50 per barrel in order to be profitable while deepwater and ultra-deepwater projects are likely to need prices to be as high as $70 a barrel in order to breakeven.
Commenting on the outlook, Leong said: “Despite the tougher external environment, particularly for our deepwater counterparts, the shallow water segment remains highly resilient even to recently announced capital expenditure cuts by national oil companies. There is a reasonable margin of safety before oil prices fall to unprofitable levels of below $25 to $50 per barrel to adversely affect our shallow water segment customers. One of Nam Cheong’s unique value propositions is in being a partner to our customers by striving to construct cost efficient vessels that benefit customers by reducing their operating costs.”
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