SCOMI GROUP BHD, a 100% Malaysian-owned company en route to a KLSE second board listing, is positioning itself to be a big player in the booming oil and gas services industry worldwide.
Currently, it may be a minnow among industry giants such as Schlumberger, Halliburton and Baker Hughes Inc, but Scomi has a big advantage in that it specialises in mud engineering. It has a more than 80% share of the Malaysian market in this specialist field.
“We intend to leverage on this advantage and expand globally. Working closely with Petronas Carigali Sdn Bhd, Scomi also intends to operate in countries which Petronas Carigali is in,” Scomi president and chief executive officer Shah Hakim Zain said.
He said Scomi was looking towards Asia, the Middle East and North Africa as areas for expansion. “We do not expect a higher market share in Malaysia as we already have over 80% of the mud engineering business here. Expansion would also mean the company would not be dependent on only one market,” Hakim told StarBiz.
Mud engineering involves the supply of drilling fluids and barite; and engineering services, the placement of engineers on oil rigs and rental of equipment.
Drilling fluids lubricate the drills as they penetrate the earth, reducing friction and helping to remove waste and broken drill bits from the oil well.The company's biggest customer in Malaysia is ExxonMobil Exploration and Production Malaysia Inc, which contributed about 40% to revenue for its financial year 2002, followed by Petronas Carigali Sdn Bhd at 37%, and Shell Sarawak Bhd at 20%.
Hakim said the group was expecting an increase of 28% in turnover to RM204mil for the year ending Dec 31, 2003, compared with last year. The company is also aiming for an after-tax profit of RM18mil for the year, versus RM15mil in 2002.
“All our divisions are expected to contribute to the targeted increase in turnover for 2003. About 80% of our turnover has already been secured through long-term contracts and recurring business, especially from the oil and gas division and transport engineering,” he said, adding that Scomi was confident of achieving its target.
On the impact of the was in Iraq on the company, Hakim said business had not been affected, and was still coming in. “Our major customers like Shell and Esso have a comprehensive database of oil reserves worldwide. If there is a problem in the Middle East, or Nigeria, then the focus would be shifted to another area,” he said, noting that more business could be coming into Malaysia.
Hakim said, going forward, the outlook for the company in the oil and gas services industry was good, as oil and gas would still remain the main sources of energy.
“However, we would be looking for oil in more difficult places, for example, deep in the ocean, which would require more sophisticated drilling, thus increasing costs. This would translate to higher income for the company as we have the capabilities and technology to do this,” he said.
For its flotation, Scomi is issuing 12.329 million new 50 sen shares at an indicative price of RM1.38 each. Of the total, three million shares would be made available for public subscription, 2.5 million for eligible directors, employees and suppliers, and the balance 6.8 million for private placement.
The listing, scheduled for May 13, is expected to raise RM17mil, which will be used for working capital and to expand the group's core oil and gas engineering operations.
Scomi obtained its name from its truck building business, which started in 1990 as Subang Commercial Motor Industries.
The company has a distinguished board of directors that include chairman Tan Sri Asmat Kamaludin, Datuk Mohamed Azman Yahya, and Datuk Hamzah Bakar, previously a senior vice-president of Petronas.
Upon completion of the flotation, Scomi's major shareholders will be Kaspadu Sdn Bhd, Onstream Marine Sdn Bhd and Symphony Advisory Services Sdn Bhd, with stakes of 27.2%, 26% and 3.1% respectively.
The controlling shareholders of Kaspadu and Onstream Marine are Hakim and his former classmate and now business partner, Kamaluddin Abdullah.
The two took over a controlling stake in the two companies three years ago.
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