Medserv issues positive statement as the Oil & Gas Market show signs of recovery
As the oil and gas industry shows signs that the market may be entering a more stable period when compared to the recent past, Medserv’s interim statement echoes this positive sentiment.
In their company announcement, the Directors’ report that the Groups total revenue expectations for the first half of the 2017 are in line with the trend of the service industry generally. The results expected for 2017 are to be split in two parts. Revenues generated from the logistics support services division in the first 6 months will reflect the still sluggish activity in the offshore industry. This sector will recover in the second half of the year as both the Malta and Cyprus operation return to production. The oil country tubular goods division of the business on the other hand is projected to render a strong performance over the entire year by the OCTG sector in the Middle East. This will have a positive impact on the Group’s results for the year 2017. Furthermore, the company report that they anticipate a strong 2018 as both main sectors contributing to Group revenue are expected to perform strongly in 2018 as the industry recovers, stabilises and returns to growth.
The yard in Malta is preparing to receive the equipment and supplies relating to the resumption of operations within the next few weeks in preparation for works that are expected to resume in the second half of the year. Cyprus too is gearing up to recommence exploration operations and Medserv Cyprus will be supporting these from its new base in Limassol whilst retaining its Larnaca base as a storage and support facility. This drilling activity by the dominant player in the region is planned to commence in the 4th quarter of this year.
Medserv Portugal has also extended its contract with the relevant IOC to January 2019 to cater for a new operational time scale set by the IOC.
Generally upturn in the industry is first experienced by onshore activity. In this respect the Group’s recently acquired business in the Middle East- METS, is registering both an increased confirmed order book and also a healthy new business enquiry pipe line. The Oman operation is the best performer in the Middle East division of the Group with revenues exceeding forecasts. A second base in the country is to be opened in Duqm in the South of Oman to service the recently announced major contract secured by METS.
The Group’s business development programme continues to be active mainly in Trinidad and Egypt. Medserv Trinidad is participating in new tenders and discussions are ongoing with a number of stakeholders. Medserv Egypt has been registered and has been successful in reaching agreement with a major Egyptian entity which will allow the company to offer base facilities out of an Egyptian port to cater for the needs of both the offshore and onshore sector. The Zohr field, ENI’s large find offshore Egypt has created great interest in the market. Business Development is also active in the Middle East studying the synergies that exist in the region with a view of expanding the OCTG services offered by METS
In an interview with Edison Investment Research published this week, the Group’s chairman and executive CEO, discusses the unique position Medserv has managed to maintain and the successes delivered during a very challenging period for the sector.
The Group’s diversification strategy has made it possible for the Group to continue to support old and new clients with a more diversified and complete product portfolio at competitive prices in line with new industry expectations. It has enabled the Group to offer cost savings to its clients without compromising on quality, the effect of which has allowed the Group not only to retain all existing contracted business but also to secure new contracts during this tough period and ensure the company is well placed to service their clients as activity in the market starts to increase as projected.
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