Ramunia on recovery path
Things finally looking up for oil and gas firm after securing new jobs
OFFSHORE oil and gas fabricator Ramunia Holdings Bhd, which is seeking more jobs from Petroliam Nasional Bhd (Petronas), may be on the path to recovery after clinching a job in March and securing a letter of intent from Sarawak Shell Bhd for jobs worth Rm150mil.
The Practice Note 17 (PN17) company’s share price has risen 8.70% to 37.5 sen year-to-date and was actively traded early last week, spiking at 42 sen last Wednesday. Ramunia slipped into PN17 status on March 1, 2010 after selling the Teluk Ramunia fabrication yard to Sime Darby Bhd for Rm530mil cash.
As part of a regularisation plan, the company proposed early last year the acquisition of another fabrication yard in Pulau Indah for Rm83.8mil from Oilfab Sdn Bhd which according to news reports was in the process of being finalised.
Then, as part of a strategy to tap into demand for services in marginal oilfield development, the company signed an agreement to acquire a floating production storage and offloading (FPSO) vessel from Drydocks World-dubai LLC and ntm Refection II AS for Rm248.37mil.
Bursa Securities had approved the regularisation plan submitted last July by Am investment Bank Bhd on Jan 19.
Observers said the company’s prospects were premised on the Government’s strategy to award contracts to a limited number of domestic fabricators in order to scale them up and provide them opportunities to develop their skills so that they might compete regionally.
According to the plans for the oil, gas and energy industries under the Economic Transformation Programme (ETP), scale and track record were limiting factors for the domestic fabricators, which handicapped them from being serious competitors at the regional level.
Furthermore, observers noted that Lembaga Tabung Haji (LTH), a major shareholder with a 25.17% stake, was not likely to led the company go under as the pilgrim fund has seven million depositors to answer to.
LTH first acquired a stake in Ramunia in early November 2007 when the shares were trading at around RM1 and at the same time when MISC Bhd had announced that it was taking over the company in an Rm3.2bil deal, which did not subsequently go through because of due diligence issues.
As part of changes in regards to LTH’S investment portfolio, Datuk Azizul Rahman Abdul Samad, which at one time controlled more than half the shares of the company, stepped down as chairman while Nor Badli Munawir Mohamad Alias Lafti was appointed group chief executive officer in July 2010.
Currently, Azizul holds 2.07% direct and indirect stakes in Ramunia.
The FPSO business, according to Am investment on behalf of Ramunia in a March 2011 announcement to the stock exchange, would allow the company “to tap into and participate in the development of marginal oilfields and deep water fields in Malaysia and the region”.
Ramunia’s acquisition of the FPSO would enable the company to create a larger value base as an engineering, procurement, construction, installation and commissioning contractor by providing the full offshore production facilities and to penetrate into the growing offshore floating facilities business within the local and regional upstream oil and gas industry.
The investment bank added that the expansion into the offshore floating business was “to take advantage of the significant spending for the oil and gas and energy industry under the ETP as Petronas plans to invest in exploration and production activities, particularly in new deep water developments, marginal field developments and the replacement of ageing assets over the next five years to sustain their current level of production”.