KUCHING: Perdana Petroleum Bhd (PPB) expects the smaller supply of offshore support vessels (OSVs) in the market to bolster demand for the group’s fleet of OSVs in 2023.
Another positive factor, according to PPB chairman Datuk Dr Abd Hapiz Abdullah, is the larger volume of oil & gas (O&G) upstream capital expenditure as signalled by stable prospects for OSVs in the Petronas Activity Outlook 2023-2025. As at Dec 31, 2022, PPB group owns and operates a fleet of 15 vessels, comprising eight anchor handling tug supply (AHTS) vessels, five accommodation work barges (AWB) and two accommodation workboats (WB).
These vessels support exploration, development facilities installation, hook-up and commissioning as well as production, operations and maintenance activities for greenfield and brownfield O&G projects.
Abd Hapiz said the local oil major has extended the age cap for specific categories of OSVs from 15 years to 20 years for its licensed OSV bidders.
“This crucial development brightens the business prospects of our eight AHTS vessels whose average age is more than 13 years per vessel as their useful life can be extended for longer,” he added in the company’s 2022 annual report.
He said the revision of the vessel age limit is, however, subject to fulfilment of the Conditional Assessment Programme (CAP) and overall Offshore Vessel Management SelfAssessment (OVMSA) by licensed OSV operators “The group has been assessing, measuring and improving its vessel safety management systems under the CAP and OVMSA frameworks to meet industry standards, thereby ensuring safe and reliable vessel operations at all times while prioritising marine crew capability development and fleet maintenance.
“We are committed to step up efforts to elevate our vessels to higher ratings of safety and performance.
Abd Hapiz said the OSV sector in Malaysia underwent a rejuvenation in 2022 after a lull in activity of seven years as O&G exploration and development activities began to accelerate.
“The group, which charters its fleet to oil majors and to engineering, procurement, construction and commissioning service providers, found the winds in its favour as it gained from profitable charter rates and the revival of work orders previously hampered by the (COVID-19) pandemic.
“We inherited a cleaner financial position at the start of financial year 2022, fresh from the group’s massive impairment exercise in financial year 2021 on property, plant and equipment (PPE) and higher depreciation charges following an adjustment to the useful life of our AHTS vessels from 25 years to 15 years.
“In response to the extension of the age cap of the specific categories of OSVs, the group adopted a prudent stance to factor in a net reversal of RM11.4 million on impairment loss on PPE for its impacted AHTS vessels and the rest of the fleet, arising from the forecasted remaining value in use,” he said.
In FY2022, Abd Hapiz said the group’s annual vessel utilisation rate rose to 59 per cent and quarterly vessel utilisation rates surpassed 2021 figures in all the four quarters.
“We also experienced higher fleet utilisation rates for all categories of vessels and hikes in average daily charter rates (DCR), the highest DCR being a 15 per cent increase year-on-year on AHTS vessels.”
In November 2022, the group sold an accommodation work barge under the fleet renewal programme.
Abd Hapiz said PPB rebounded into the black with group net profit of RM11.4 million on revenue of RM196.6 million in FY2022, driven by steady recovery of the Malaysia OSV sector and higher crude oil prices.
In FY2021, the group incurred huge losses of RM328.3 million on revenue of RM153.5 million.
He said the group’s financial position strengthened year-onyear whereby net assets climbed to RM585.3 million and total loans and borrowings dropped to RM52.6 million.
The group’s debtto-equity ratio fell to nine per cent from 13 per cent in 2021. “In addition, our cash flow position recorded cash and cash equivalent of RM45.4 million, comprising RM35.6 million in deposits placed with licensed banks, owing to improved collection of trade receivables, and RM8.9 million in cash on hand and at banks. Abd Hapiz said PPB was encouraged by the group’s performance in 2022 as it indicated that its business turnaround plan was on the right course.
He said the group’s strategic alliance with its parent company — Dayang Enterprise Holdings Bhd — also kept PPB in good stead as “we build upon this year’s momentum to propel the business further in 2023.”
In 2023, he said crude oil price volatility is anticipated following the prolonged war in Ukraine, the anticipation of a global economic recession, rising inflation and lending rates and lower levels of consumption, all of which combined may weaken the demand for crude oil and other energy commodities.
“In terms of operations, our vessel fleet hopes to welcome new additions if opportunities arise but any acquisition will be subject to detailed consideration, particularly the funding aspect.
“We are also setting our sights to bid for regional projects to expand our client base,” he added. PPB managing director Jamalludin Obeng said the Malaysian OSV market is expected to register consistent growth for FY2023 concurrent with the increase in offshore development, production operations and maintenance activities for the O&G sector, on the back of crude oil price recovery and resumption of charter projects which were earlier deferred and/or rationalised due to the COVID-19 pandemic.
“Buoyant sentiment in the OSV sector is expected to persist, albeit tempered by on-going macro-economic uncertainty and geopolitical tensions worldwide. Hence, the group is cautiously optimistic about its prospects for FY2023,” he added.
