Tgoffs ... Feb10

Tanjung Offshore Bhd is bidding for up to RM1.5 billion worth of projects as it pursues an organic growth strategy towards sustaining earnings over the longer term.

The oil and gas (O&G) support services provider, which is anticipating its maiden overseas income in the current fiscal year, was also planning to raise funds to refinance existing loans and facilitate business expansion plans.

Based on Tanjung Offshore’s historical tender success rate of 20%-30% and its ongoing bids of between RM1 billion and RM1.5 billion, the firm has the potential to secure at least RM200 million worth of jobs. The company already has RM1.3 billion worth of outstanding projects across Malaysia, Indonesia and the UK which are expected to sustain earnings for the next five years.
It is also eyeing new businesses in the Middle East, India, Vietnam and Thailand.

For the current financial year ending Dec 31, 2010, the company expected revenue from its operations in Indonesia and the United Kingdom to contribute a tenth to the O&G support services provider’s top line.

Foreign income will be supported by global sales of Tanjung Offshore’s gas generators and waste-heat recovery units, which are manufactured in Indonesia and the UK respectively.

The company has secured deals worth a total of RM249 million, mainly from Petroliam Nasional Bhd’s (Petronas) upstream unit Petronas Carigali Sdn Bhd. These include a RM70 million job to provide wellhead maintenance services for Petronas Carigali’s operations across Malaysia.

Petronas Carigali, which has ordered about RM25 million worth of glycol dehydration packages from Tanjung Offshore, will also lease anchor handling tug and supply vessels under long-term contracts worth some RM150 million from the O&G support services company.

Besides Petronas, Tanjung Offshore has also clinched a RM4 million contract from Murphy Sarawak Oil Co Ltd to supply gas engine generator spare parts.

On fund-raising initiatives, Tanjung Offshore was considering bank loans and private placement of new shares. The private placement may be undertaken within the next 15 months depending on market conditions.

Apart from refinancing Tanjung Offshore’s long-term loans to take advantage of the existing low interest rate environment, proceeds from potential fund-raising exercises will be used to finance the construction of new marine vessels.

Between 2005 and 2009, Tanjung Offshore’s fleet expanded from two vessels to 16. Marine support services will be become a major contributor to Tanjung Offshore’s financials.

Going forward, expecting marine services to continue to be the company’s main revenue driver and its growth to be sustained by strong crude oil prices.

Tanjung Offshore did not specify geographical or business division segmental numbers in notes accompanying its latest quarterly financial results. However, marine services constitute the bulk of Tanjung Offshore’s revenue while maintenance services make up between 10% and 15%.