Oil and gas: Rising with new oil optimism

• Dayang, Perdana Petroleum gain from synergistic relationship • OceanMight’s completion of first ECP project a testament

Dayang Group has always been proud to be able to maintain its impeccable track record of achieving record earnings, growing from strength to strength ever since its IPO in 2008 until 2015.

However, 2016 has not been a good year for the group, reflected in its financial performance following a tough operating environment in the oil & gas industry due to a prolonged and depressed down cycle in the price of crude oil.

“While Dayang can count its blessings for being involved in the brownfield maintenance services rather than the volatile exploration and production segment, we are not spared from the weak oil price,” the group outlined in its Annual Report 2016.

“Having said that, we are grateful that our business operations still remained profitable.

Comparatively, Dayang is able to sustain the adverse effect of the industry slowdown as many of the oil & gas companies have incurred heavy losses in 2016. Our strong “executional track record in hook-up commissioning and topside maintenance services has come in handy for us to weather the storm.”

Dayang attributed its integration with Perdana Petroleum Bhd since the completion of take-over in August 2015 has been running smoothly.

“We take cognisance of the challenging outlook for the offshore supply vessels (OSV) market, but the acquisition of Perdana Petroleum was made in the interest of our group’s long-term sustainability as we believe this is a strategic fit into Dayang’s core business.

“In addition, we maintain our long term view that Dayang Group will be transformed into a larger maintenance services player with undisputed leading market position in Malaysia.

“Dayang’s strong order book of RM2.8 billion – with most of the contracts on call-out basis – will provide strong earnings visibility over the next two years, and hopefully we will even emerge stronger after this tough time.”

While major oil and gas clients in the first half of 2016 have been rather slow in rolling out its work orders which could be attributed to the soft crude oil prices.

“However, our diversified portfolio of client profile has helped to offset the impact of a slower first half of 2016. In the second half of 2016, it is pleasing to note that more work orders started to flow stemming from more maintenance activities from all the call-out contracts in Dayang’s order book.”

The synergistic tie- up with Perdana Petroleum has ensured Dayang will always have access to adequate and reliable vessel supply to position itself to take on engineering and construction projects.

The combined expertise of Dayang and PPB will further enhance its competitive advantage.

“While demand for offshore supply vessels is tepid at this juncture, we are cautiously optimistic that we will be able to further improve our vessel utilisation this year in view of the healthy oil price recovery which has more than doubled from a 13-year low of US$27 per barrel to US$53 per barrel.”