Medserv awarded contract for logistics support to Eni North Africa
Malta Stock Exchange-listed Medserv has been re-awarded a contract by Eni North Africa (EniNa) to provide logistics base and associated services for its exploration activities taking place offshore and onshore Libya. The contract duration is for a period of one year with the possibility of extending for another year. This contract comes into effect on the 1st of January 2017. These services are to be carried out at the company’s Malta base situated in the Malta Freeport.
This contract, in addition to the two-year major logistic and base support contract that came to market in 2016 for offshore Libya activity that was announced earlier this year consolidates the business pipe line for Medserv Operations and work levels for the Malta operation are expected to be high in the next three years.
Edison Investment Research, an independent research body, also published their Q3 trading update earlier this week. The report issued indicates that, despite the very challenging macro environment, Medserv is maintaining a robust overall performance aided by the initial contribution of METS. The report states that Edison’s numbers are unchanged and they quote a fair value calculation of €2.03 per share.
Medserv provided an update of the status of their international operations in their interim Directors’ report issued earlier this week. Medserv has maintained operations in the Tripoli office to support the work being done in Malta for Libya and has in place plans to return to Libya as soon as the situation in Libya allows it to do so. Meanwhile, operation in Cyprus remains unchanged. The base in Larnaca is still in a mothballed position and discussions are ongoing with both clients and local authorities on the future of shore base services. The operation in Portugal is also in mothball mode and drilling operations are now expected to commence in the first quarter of 2017.
The company also announced that it is very active in development work in new markets. A Trinidad office has been set up to develop business in the Caribbean region, where Medserv is participating in a tender bid for business offshore Trinidad. The outcome of this competitive bid should be known by the year end. The company has also been accepted on the vendor list of a further two companies with operations offshore Trinidad which will allow the company to participate in tenders expected to be issued in 2017.
Medserv Egypt is up and running with the office set up in Cairo and has been accepted on the vendor list of two IOCs operating offshore Egypt. The company reported that the first tender which they may participate in is expected to be issued in November 2016.
The company also reported that the decision to invest in the Oil Country Tubular Goods (OCTG) market of the Middle East via the acquisition of METS has had a major impact on the group. Turnover and profitability in Oman are expected to surpass forecasts. The U.A.E. is expected to reach the budget profit. The Iraq company has just completed the restructuring plan which allows METS Iraq to remain fully functional and work at break-even as of October 2016. Signs that the Southern Iraqi oil and gas market is picking up continue to strengthen with IOCs showing renewed interest. The synergy that exists in the product portfolio of both companies has started to deliver new revenue. The first contract for pipe testing was successfully completed in the Medserv Hal Far Malta facility using technology and know-how imported from METS.
Despite the fact that the first three quarters of 2016 have proven to be challenging to the oil and gas industry and Medserv has had to respond and adapt to these market realities, the initiatives taken by the company to date have not only reduced the shortfall in performance but also placed the company in a position to perform strongly next year.