we examine the demand and supply dynamics of Liftboats, we must first understand the energy
outlook within the South East Asia (SEA).
Outlook for South East Asia
countries in SEA. Indonesia, Malaysia and Brunei lead the oil and gas
production in SEA while potential growth lies in countries such as Vietnam and Myanmar.
Rising Energy Consumption
energy due to sustained economical and social development. Although SEA has
rich resources of energy, many countries are relying on imports due to the
supply of energy unable to catch up with rapidly rising demand. Indonesia and
Malaysia are the two largest oil and gas exporter in SEA. Since
financial crisis in 1998, Indonesia had under-invest in its oil and gas
exploration. Major oil and gas fields are drying up and are not replaced by new
ones, due to a lack of exploration. Similarly, Malaysia has seen consumption grow
while production has been falling over the past decade. This leaves smaller
volumes of oil available for exports. Petronas had promised to ramped up its capex
to minimum RM300b from 2011 to 2015.
is a chart from IEA showing ASEAN growing demand of energy.
decline in energy production in SEA aside from rising consumption is a result of large numbers of maturing fields, particular
the ones in shallow waters. Many oil platforms are already old and required
maintenance/upgrade such as replacement of tubings, valves, pumps that may be malfunctioned.
Some very old platforms are also required to be removed, while new ones are to added. Liftboats are built specifically for this purpose.
self-propelled (maneuvering capabilities) vessel equipped with at least
one crane and with open deck space that can be used for support
of various offshore activities. Liftboats are commonly used to perform maintenance on oil and
gas well platforms, normally for shallow water field
services. Its applications include:
- Oil well intervention activities (e.g. wireline and coiled tubing)
- Maintenance and repairs of offshore platforms
- Upgrading/Construction of offshore platforms
- Removal of old platforms
- Accommodation for construction and service crews
to S$2.20 today achieving a market cap of S$2.6bil.
liftboat players are from USA except for Gulf Marine Services base in Middle
of SEUs, BH450 series proprietary-designed 450ft (approx 130m) leg length
SEUs. The BH450 is reported to be the world largest Liftboat to be delivered by End 2Q2014. As of end 2013, Triyards had delivered 6 SEUs with a backlog of 3-4 SEUs. Lamprell based in UAE is the biggest contributors in Middle East.
platforms. The concept of liftboat servicing
platform is uncommon in the past.
workboats to service the platforms. These vessels are often multi-purpose with
other functionality such as drilling, pipelaying, construction or other
efficient to utilise a dedicated vessel to perform the dedicated work of
maintenance, upgrading or removing of platforms. Liftboats is effectively a
low-cost alternative for a wide array of offshore jobs– construction,
work-over, maintenance and platform removals.
built together with drilling capability. It will be very expensive to charter
them for service of platforms compared to a liftboat. Moreover jack up rigs and derrick barges
are not self-propelled and required mobilisation services of towing and mooring
from offshore support vessels such as AHTS and Tug boats. This will mean
additional charter charges.
capacity crane. However a workboat is without the Jack up legs and cannot be too close
to the platforms since it require mooring services. Also during bad wave
condition, a workboat has to stop working because of stability issue due to the
wave movement. In contrast, liftboat is more stable even during adverse weather
conditions. It can jack itself above the maximum wave height and continue to
perform its work unaffected even up to water depths of 220 feet.
platform, subject to weather conditions and requires towing and mooring assist
services from OSV. On the contrary, a Liftboat shown below is jacked up and stable, unaffected by the wave or weather conditions.
that Ezion owns is approx. US$55-60mil. A typical standard B class design
Keppel Fels 300-350ft Jack up will cost US$180-220mil. A drilling Tender Barge owned by
SapuraKencana will cost US$130mil.
charter of a liftboat.
= 55m. Opex = 0 insignificant due to bareboat charter. Taking into account other cost in project such as manpower, maintenance, survey work, total cost can add up to approx.
30% or more on top of building cost. This work out to be Total Capex = approx. 77m (p.a. = 11m).
for SEUs in Asia Pacific, Middle East and Africa remains strong, due to aging platforms and increasing offshore construction activity.
- North America has 250 liftboats servicing 3,257 fixed platforms i.e 1 SEU = 13 platforms.
- Southeast Asia (SEA), Middle East and West Africa has 62 SEUs against 3,266 fixed platforms i.e. 1 SEU: 53 platforms.
It is quite
obvious that demand is still robust. The niche in the SEU field will
also benefit companies like Ezion, Ezra, Swissco and Triyards who is already in the business well ahead. The investment in Ezion (over US$100MM) by Tan
Sri Quek Leng Chan (Chairman and CEO of Hong Leong Company) few months back, further
reinforced this view.
capex model of Liftboat leading to high leverage can be potentially dangerous if economy took a turn such as the financial crisis in 2008. Due to high return in the sector, it will potentially attracts more competition not
only from current liftboat owners but also newcomers driving charter rates down. There will also be risk of delay in its building timeliness, especially when
Ezion already start awarding order to Chinese yard.
for Ezion, it had already grown incredibly to billions of market cap within the
short last few years. Having on of the largest fleets and high leverage will also mean rigidness when things goes wrong. Personally, I prefer smaller company like Swissco or even Triyards
who I reckon have more growth potential with much lower PE and PB ratios.