EOC Limited (EOC or the Group), a provider of offshore accommodation, construction and production vessels and services to the oil and gas (O&G) sector, has reported a sharp increase in its net attributable profit to US$44.0 million for the second quarter ended 28 February 2014 (2QFY14) from US$1.4 million in 2QFY13.
The strong performance was largely attributable to the US$36.4 million gain arising from the sale and leaseback arrangement for the Lewek Champion, the Group’s DP2 pipelay and heavy lift construction vessel, as announced on 19 February 2014. Increased contributions from its core operations also played a key role. In particular, the Group’s two floating production, storage and offloading (FPSO) vessels, the Lewek EMAS and the Perisai Kamelia, enjoyed high uptime and lifted EOC’s share of earnings from associates to US$5.5 million in 2QFY14, against US$0.2 million for the previous corresponding quarter of 2QFY13.
Group operating revenue increased by 45% to US$11.5 million, mainly due to increased contributions from project management, engineering and procurement services. Driven by these robust second-quarter results, EOC achieved a net attributable profit of US$47.1 million for the first half-year ended 28 February 2014 (1HFY14), against US$2.2 million for 1HFY13, having seen a 22% increase in revenue to US$22.6 million.
EOC’s Chief Financial Officer, Mr Jason Goh, said: “This robust second-quarter illustrates our efforts to strengthen the Group’s balance sheet and financial position. Our net gearing has significantly improved, and we are now in a good position to move ahead to pursue growth opportunities.”
The transaction proceeds from the US$200 million sale and leaseback arrangement for the Lewek Champion has enabled the Group to reduce its bank borrowings and strengthen its balance sheet, and has contributed to the reduction in its net gearing to approximately 3% as at 28 February 2014 from over 100% as at 31 August 2013.
Backed by its excellent operating record in the offshore accommodation and support sector, the Lewek Conqueror, one of the Group’s two accommodation and construction barges, recently clinched a contract worth close to US$100 million, which is expected to contribute to earnings from 3QFY14 onwards. The vessel will be deployed for a project in Southeast Asia that will run for a period of five years with a two-year extension option.
Added Mr Goh: “The long-term fundamentals of the oil and gas industry will continue to drive offshore development and production activity and thus demand for our construction and production assets and services. We are confident of leveraging our capabilities to build on our position in the accommodation and support market segment.”
Press Release, April 09, 2014