M3nergy/Melewar ... Aug09

Sources say a revitalised M3Nergy, which is part of Melewar, has attracted several foreign and local suitors. The suitors have indicated interest in the company’s assets which provide services to the O&G industry.

M3Nergy is on track to take delivery of an ESO (floating, storage and offloading) vessel and its barite plant in Labuan will be commission soon. It is increasingly becoming a complete O&G service provider, a fact that has attracted suitros.

Sources say some local suitors have expressed interest but it could not be determined if these are the same old names some four years ago. Apart from local names, foreign companies involved in the O&G business have also indicated interest.

M3Nergy’s management declined to comment.

Currently (Aug 2009), the major shareholder in M3Nergy is Melewar group, which is headed by Tunku Datuk Ya’acob Tunku Tan Sri Abdullah who holds a position in the former as a non-independent non-executive directors.

Its NTA per share stood at RM3.28 as at March 2009. For 3Q2009, M3Nergy recorded a net loss of Rm16.2 million even as its revenue increased y-o-y. The loss as partly due to a provision made during the period for the termination of a contract to develop offshore marginal fields in India known as Cluster 7.

The company’s main asset now is its FPSO (floating, production, storage and offloading) vessel located off the shores of Terengganu and which has been operating under a long term leasing contract with Petronas Carigali.

On Jan 31, 2008 Carigali PTTEPI Operating Company Sdn Bhd awarded M3Nergy a contract to supply and operate an fSO for up to 16 to 20 years. In June 2008, M3Nergy took delivery of the oil tanker that will be converted into FSO, with commissioning expected to be in 3Q2009. In addition, M3Nergy holds the contract to operate and maintain the FSO Puteri.

The company main focus now is on growing its FSO and EPFO business, which offers recurring income. Now, with oil prices back on an upward trend, there will be increased demand from all the national oil majors for storage facilities.

The improvement in oil prices also bodes well for M3Nergy’s ptehr major business – supplying barite.

Also in the pipeline for M3Nergy is a move into upstream O&G activities as a natural extension of its FSO and EPSO business. The company still holds an O&G block in Indonesia.

To the company’s credit it has been working to dispose of all its non core businesses and assets over the past few years. One of the notable is its stake in MMM, where losses at the latter had dragged down its earnings. It is currently looking for buyers for the remaining 20.9 million shares in MMM is still holds.

It also disposed of its quarry business in 2008, while its cash rich Singapore subsidiary, Maveric Ltd – which sold its entire business in 2006 for S$120 million – is still on the lookout for acquisition.