Ezra Wins FPSO Charter Contract

EZRA Holdings has obtained written confirmation of intent from an oil major to charter its Floating Production, Storage and Offloading facility ("FPSO") for US $265.65 million (or S$417.86 million).

EZRA expects to operate the FPSO for four years over FY2008-2011 at oilfields in waters in Southeast Asia. This charter contract comes with an extension option of up to 3 years, which when exercised, will raise the contract sum to about US$397.25 million (S$624.87 million).

"This contract is a significant milestone for Ezra as we will be the contract operator of the field and it will involve the possible hire of our vessels from our Offshore Construction and Production Division, and complement our yard fabrication facilities. In recent times, where oil majors are increasingly outsourcing the operation and maintenance of their facilities, this contract provides a strong foundation for Ezra to expand into more long term contracts of this sort," said Mr. Lionel Lee, Ezra's Managing Director.

He added :"We are fast reaping the benefits of our fully vertically integrated offshore support services model where we can provide a wide range of support vessels deployable at different stages of an oilfield's life cycle. This strategy has enabled us to strengthen our ties with various oil majors as they look to develop new offshore fields, especially those in deep waters."

The Group's Offshore Construction & Production Division which provides offshore construction & assembly services, pre-fabrication work and transportation services, is also looking to assist the FPSO as it will be mainly used for the development of greenfields. The required offshore construction and pre-fabrication services will likely involve vessels like Ezra's Heavy Lift and Accommodation Crane barge, the Lewek Conqueror, as well as its Heavy Lift Accommodation Pipelay vessel, the Lewek Champion. The latter vessel is currently under construction with delivery slated for FY07.

Currently, high steel prices and tight shipyard newbuilding capacity make FPSO conversions commercially viable and attractive investments to oil companies. FPSOs have the advantage of being able to commercially exploit smaller marginal fields with a short field life which are abundant in the Southeast Asia producing areas. FPSOs are also commonly used in deep water fields, where traditional shallow water production platforms are restricted in terms of deployability.

Ezra also announced that its offshore support vessel chartering division has secured a term charter contract for an Anchor Handling, Towing and Support vessel from an Indian conglomerate for operation in India. This contract marks its first entry into the Indian offshore support services market.

"We are optimistic that the charter of the FPSO and the possible hire of the other support vessels as well as those from our Offshore Construction & Production Division will give a strong lift to our earnings in the medium term. We also see good growth potential in India and hope to secure more contracts there," said Mr. Lee.