Wednesday, November 12, 2014

Perisai ... Price Kept Plunging ... Anymore HOPE!!!


Its MD said Perisai will return to the black as its venture into the highly lucrative drilling business is expected to make up for the near-term earnings slack. Following the launch of its first jack-up rig, it hopes to turn the company around as it starts contributing to the group’s revenue from August 2014.

The company’s first jack-up rig – the Perisai Pacific 101 – had cost RM650mil to build. It is now operational off the coast of Terengganu and is expected to contribute RM20mil in revenue during the current year ending Dec 31, 2014 (FY14). The rig is on a three-year contract worth RM503mil awarded by Petronas Carigali Sdn Bhd in May.

The company will focus on the jack-up drilling segment over the next three years from 2014.

It will take delivery of two additional, high-spec jack-up drilling rigs worth a combined RM1.2bil to bring its fleet size to three jack-up rigs by mid-2016. It has started negotiations with potential clients for jack-up Perisai Pacific 102 (PP102), which is scheduled for delivery in April and May 2015. PP103 is expected to join the fleet in June 2016.

With its second rig, Perisai will widen its reach to the Asean market while maintaining its focus in Malaysia.

At present (Aug 2014), there are 15 jack-up drilling rigs operating in Malaysian waters, of which only two are locally-owned.

Perisai is well-positioned to bag more drilling jobs, as there are more than 10 foreign jack-up drilling rig contracts due for expiry in the next one to two years from Aug 2014. A jack-up drilling rig has a life span of between 25 and 30 years.

On the regional front, it has been reported that over 40 jack-up rig contracts in South-East Asia will expire between mid-2013 and 2015.


Perisai is targeting for its drilling segment to contribute about 60% of revenue within three years from Aug 2014.

Perisai’s quick turnaround will be propelled by the commencement of Perisai Pacific 101 and positive contribution from its floating, production, storage and offloading (FPSO) vessel - Perisai Kamelia.

The new assets are the game changer for Perisai, as the company evolve from a charterer to asset operator.


While upbeat about Perisai’s drilling venture, which will ride on Petroliam Nasional Bhd’s (Petronas) asset localisation policy that favours domestically-flagged vessels, however that there are concerns charter rates for such assets could soften given the new rigs that will enter the market within the next 21 to 24 months from Aug 2014.

That means Perisai may need more time to recoup its investments.

Revenue during the quarter plunged 65% to RM10.87mil from RM31.69mil.

Rubicone and E3 are likely to remain unemployed for the rest of 2014.

Look beyond the anticipated soft FY14 performance caused by the downtime of Rubicone and E3, FY15 and FY16 are set to be substantially stronger years as all the assets to be fully deployed,
Moving forward, Perisai aims to narrow its focus on drilling and production, and expects to exercise a put option to sell its derrick pipe-lay barge in two to three years from Aug 2014.

Rapid expansion in the drilling business is putting some strain on the company’s finances. Perisai’s total borrowings currently (Nov 2014) stand at RM1.1bil, taking its gearing level to 0.91 time. Management guided that its medium-term notes incurred an interest cost of RM5mil year-to-date.

With the purchase of all three jack-up drilling rigs, Perisai’s net gearing will be ballooned.


Perisai did not pay out any dividends in 2013 due to its high capex needs.

It has put down a 20% deposit for the construction Perisai 102 and Perisai 103, with the remaining 80% to be satisfied via external borrowings.

It had issued a S$102mil (RM261.43mil) in principal amount of fixed rate notes due 2016.

The group owns and operates a fleet of eight offshore support vessel (OSV), of which eight are chartered out till August 2015.

Its OSV business provides a steady of income as it expand into the drilling segment.

The company expects to add another one OSV fleet by the end of the third quarter 2014

The OSVs are held under the Intan Group, a 51% owned subsidiary of Perisai

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