Coastal Sells 2 OSVs for $62M

Coastal Contracts Bhd announced that its wholly owned subsidiary, Thaumas Marine Ltd, sold two offshore support vessels (OSV) for US $62 million (approximately RM201.5 million).

"Including these new deals, the Group's outstanding vessel order book had soared past the RM1 billion mark. The constant rate at which our order book is topped up underscores our buyers' confidence in our ability to deliver. Anchored on the buoyant oil and gas sector as well as the growth in global seaborne transportation, we maintain our optimism for further roll-in of regional and international orders for our vessels not only for the remainder of this year, but also beyond. With crude oil prices extending further into record territory, the resultant spurt in exploration and production outlays by oil and gas companies will in turn reinforce demand for our OSV," said Ng Chin Heng, the Executive Chairman of Coastal.

So far in 2008, the aggregate value of vessel orders clinched by Coastal Group has amounted to RM518 million, comprising a variety of offshore support vessels, tugboats and barges. With the securing of these latest sales, the outstanding value of the Group's vessel order book has reached an all-time record of RM1.2 billion, with deliveries stretching into 2010.

"Due to the difficulty of finding yard space and high cost of operating older vessels, the OSV market is currently tight as more demand is chasing lagging supply. On top of that, if we add into the equation the attrition of the world's existing OSV fleet, we can see that this whole supply-demand disparity scenario is tipping in the favour of shipbuilders like Coastal Group. Furthermore, we are seeing a fundamental shift of the shipbuilding trend towards larger, more powerful and more sophisticated tonnage, and consequently far pricier OSV, as the offshore industry moves to harsher environments at greater depths. Given that we have successfully ascended the OSV value chain, we expect the Group's revenue and earnings not just only to hold ground but to pace up several notches moving forward," concluded Ng.