Swiber Targets Deepwater Drilling Business as New Engine Growth
Swiber Holdings Limited has honed in on the fast-growing deepwater drilling activities to further drive its aggressive growth trajectory. The company has incorporated a new subsidiary known as "Swiber Offshore Drilling Pte. Ltd." in Singapore ("Subsidiary") with the initial issued share capital of US$100,000.
The Group has teamed up with offshore oil and gas industry veteran Mr. Glen Olivera, to incorporate Swiber Offshore Drilling Pte Ltd, to spearhead the Group's deepwater drilling business.
Swiber Offshore Drilling is 90% owned by Swiber, with the remaining 10% held by Mr. Olivera.
"The incorporation of Swiber Offshore Drilling adds an exciting dimension to our business model. Every detail, every nuance of this new business area has been carefully planned. Our vision is not to just build another business, this will form a key growth engine for the company going forward," explained Mr. Raymond Goh, Swiber's Executive Chairman and CEO.
Swiber started in 1996, operating a fleet of support vessels, which are chartered to customers throughout their various stages in their offshore oil and gas exploration, development and production projects.
Led by an experienced management team, Swiber had, in 2002, identified the need for offshore EPCIC contractors in oil and gas exploration, development and production projects and had, accordingly, began to focus on the development of its offshore EPCIC business. The tactical move augured well for Swiber as offshore EPCIC services now accounts for the Group's main revenue and earnings drivers.
Till now, Swiber's EPCIC business segment has been primarily involved in the shallow water activities in Asia Pacific and the Middle East. With the new subsidiary, the Group intends to widen its offshore services portfolio into the deepwaters of the Asia Pacific region.
"Swiber is a niche service provider to the offshore oil and gas industry. We have grown our business due to our quick response to market trends and opportunities. The marine support service was the major driver of Swiber's growth for our first five years, while the EPCIC business steered our growth to the next level thereafter. The exponential growth in the niche deepwater drilling area presents an immense opportunity before us, which we would like to leverage and tap into. Over the next few years we foresee deepwater drilling business emerging as our new engine of growth, " said Mr. Goh.
He continued, "Our strategic rationale to go into deepwater activities rests on compelling trends in the oil and gas industry. Energy demand continues to grow and offshore sources is accounting for an increasing proportion of oil supply. And with most of the 'easy oil' found, the industry increasingly has to look to harsh environments and deepwaters for new opportunities. We believe that this will have a major impact on industry expenditure and indeed, studies forecasts that nearly US$25 billion will be spent annually in deepwater capital expenditure by 2012."
Based on recent market statistics, deepwater oil and gas industry is set for continued growth through to 2012, with over 30% growth forecast for the 2008-2012 period when compared with the previous five years. Deepwater oil production currently accounts for almost 15% of total offshore production but over the next few years its share relative to shallow water output will grow, accounting for around 20% of offshore production by 2011.
To be noted, Asia is emerging rapidly as a significant deepwater region. Indonesia, Malaysia and India possess development prospects for the 2008-2012 period, and the region should account for 10% of deepwater Capex during this time.
Swiber Offshore Drilling will be headed by Mr. Olivera, an industry veteran with 35 years experience in the oil and gas drilling business. Mr. Olivera has supervised onsite drilling projects as well as managed drilling groups that have drilled in excess of 130 deepwater wells in East Kalimantan, Myanmar, Philippines and Australia in waters from 800 to 2,400 meters. His background includes significant experience drilling in shelf operations in West Africa and Trinidad; ERD wells in the Netherlands and California; and HTHP wells in Madura Straits and Mobile Bay and rocky mountain regions of US. He has a solid track record of substantially cutting cost in offshore wells compared with standard drilling techniques and technology.
Commented Mr. Olivera, "I am very excited to be a part of the Swiber Group's journey to complete their vision in providing a one stop solution for the oil and gas industry. The increasing global needs for energy, drives the oil and gas industry, towards the exploration of deep and ultra deepwater regions. This is evident by many of these projects currently undertaken in Africa, Latin America, Gulf of Mexico and South East Asia. In discovering the potentials these regions, the main issue face by may operators and oil majors are effective low cost solutions. This can be overcome by the Swiber Group as it is able to provide a chain of support in providing a solution to its clients. The entry of Swiber into the deepwater regions is timely as the neighboring South East Asia countries, such as Malaysia and Indonesia, Philippines, India, are actively exploring and launching projects in the deepwater region."
"Glen is well respected in the drilling community, and arguably one of the world's most experienced deepwater drillers. His expertise and knowledge, together with his highly experienced drilling team who has been with him for 10 years, will benefit the company immensely – we're thrilled to have him and his team on board," commented Mr. Goh.
Recently in October 2007, the Group announced the acquisition of two Subsea Support vessels and two deepwater Anchor Handling Tug/Supply (AHTS) vessels from Thaumas Marine Ltd for US$108.0 million. The new vessels, which are expected to be delivered between last quarter of 2009 and first quarter of 2010, marks the preview' of Swiber's strategic move to capture the subsea and deepwater activities.
"Swiber has enjoyed phenomenal success, and the opportunities facing the Group going forward are tremendous. With our new subsidiary, we have every intention of extending our reach and entrenching our dominance in the offshore oil and gas services industry," said Mr. Goh.
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