EOC Earnings Swell 267% Amid Offshore Construction, Pipe Laying

EOC Limited has reported an impressive set of results for the nine months period ended 31 May 2008 (9M FY08).

Riding high on buoyant production and construction demand in the oil and gas industry, the Group reported a 267% surge in net attributable profit to US$18.3 million, after revenue shot up 570% to US$80.3 million over the nine months.

What pitched revenues to new highs was chiefly the charter income from EOC's new heavy lift accommodation pipelay vessel, the Lewek Champion, which came onstream in August 2007. Revenue from this vessel boosted the Group's revenue by US$53.8 million in 9M FY08. The Lewek Champion successfully executed amongst others, two offshore construction projects in January and April 2008, and is currently being deployed at other prominent projects.

"The offshore oil and gas sector is flourishing," said CEO Lim Kwee Keong. "With record high oil prices and firm demand helping to sustain the current level of offshore oil and gas activity, EOC plans to scale up the size of our operations in order to capitalise on the multitude of business opportunities in the sector.

"Our success in landing a US$400 million contract for the Lewek Arunothai - our first floating, production, storage and offloading (FPSO) vessel - will not only raise EOC's profile significantly as a serious and reliable FPSO player, but also enhance our position as an integrated solutions provider for the offshore energy sector. In addition, EOC's return on equity has increased from 17.3% to 19.2% in 9M FY08, which clearly demonstrates our commitment to improving shareholder returns."

EOC generated positive cash flow of US$8.2 million from operations, while maintaining its interest cover at a healthy level of about 5.5x for 9M FY08. Earnings per share grew from 6.7 US cents to 16.5 US cents on an enlarged weighted average share capital of approximately 110.96 million shares.

For the three months period ended 31 May 2008 (3Q FY08), EOC's net profit rose 193% to US$6.0 million as revenue leapt 276% to US$23.5 million. For the quarter, the Lewek Champion contributed US$14.6 million in revenue, of which US$6.5 million was related to earnings from construction projects. The Group's overall gross margin remained strong at 43.5% in 3Q FY08, despite the lower margins earned on construction services contracts (due to procurement activities) and new third-party chartering contracts.

"Our young, technologically advanced fleet is optimally employed, and enquiries for our FPSO and offshore construction and accommodation services have increased noticeably over the past year," said Lim. "Charter rates are expected to stay firm, and we believe our fleet will remain well-deployed over the medium to long term."

EOC recently announced that it had successfully delivered the Lewek Arunothai on time and within specifications to a Southeast Asian oil company for a contract worth up to US$400 million - its largest to-date in value terms. Among the biggest gas FPSOs operating in the world, the Lewek Arunothai will be deployed in one of the largest natural gas fields in the Gulf of Thailand.