UMW O&G division is going places

UMW Holdings Bhd's oil and gas division, which achieved spectacular results last year, will continue to expand so that it will remain a gusher. 

The company has completed building a base of operations in China through acquisitions and planting up its own facilities.  

Following that, it is currently expanding in the direction of the Middle East and India this year.  

“I have completed doing the joint ventures and acquisitions in China, and I don't need to invest there anymore. We are now looking at the Middle East and India,” UMW managing director Datuk Dr Abdul Halim Harun said in a meeting with StarBiz.  

The group is also setting up shop in Vietnam, which has also become an oil producer.  

NAGA-1, a semi-submersible rig co-owned by UMW Drilling Co Ltd.

Its oil and gas (O&G) division made an operating profit of RM95.7mil last year. If the division were a listed company, it would be the most profitable on Bursa Malaysia's O&G sector, after MISC Bhd.  

This division's profits could continue to expand this year. It had completed several joint ventures last year, including teaming up with Japan Drilling Co Ltd of Japan.  

That has paid off, with the joint-venture company, UMW JDC Drilling Sdn Bhd, awarded a contract in January to provide a drilling rig to Petronas Carigali Sdn Bhd for the drilling of 20 wells, and an option of an additional 20 wells. This project will contribute to UMW division's earnings this year.  

UMW did not start its expansion into O&G through contracts from Petronas, although it also serves the latter. The diversified car-based group kicked off the expansion programme with acquisitions in China.  

After several years into that programme, the group now has an array of associated companies and subsidiaries in China, with the most profitable being Wuxi Seamless Oil Pipe Co Ltd, a subsidiary.  

This company, which manufactures drill pipes, has been expanding its plant capacity. “The new capacity will start production in May or July,” he said.  

Its other O&G companies in China include those in Shanghai, which provide pipe-coating services, similar to Wah Seong Corp Bhd, the global pipe-coating outfit controlled by the family of Datuk Tan Chin Nam. 

UMW has also expanded into Australia, where it bought 60% of a Perth-based petro-pipe trader and manufacturer in October last year.  

While UMW has expanded into several markets, it is focused in the downstream side of the O&G sector, mainly in services and trading and manufacture of a range of pipe products. It has not, so far, moved midstream into, say, supply vessels.  

As the group explores for more opportunities throughout the Asia-Pacific, it does so with confidence that it has the financial muscle to execute its plans.  

It held cash totalling over RM1.3bil at the end of last year, when its operating cashflow was more than RM600mil. These streams of cash are more than ample for a “well-oiled” acquisition programme. 

 UMW :  [Stock Watch]  [NewsUMW-WA :  [Stock Watch]

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