UMW ... Jul12

After learning the hard way that the pipes segment in the oil and gas industry is a cut throat business, UMW is now building up its drilling assets to drive the division to profitability.

Towards this end, it is looking to expand its fleet to rigs as the O&G division returns to profitability. UMW, a PNB controlled company that is also in the automotive and heavy equipment businesses has the option to purchase another option to purchase another rig priced at US$212 million after acquiring a jack up rig for US$214 million and to be delivered by Feb 2013. UMW’s total fleet of oil rigs that currently (June 2012) stands at three. The new rig does not have a charter yet but UMW will land a contract soon.

Two of the three rigs – Naga 2 and Naga 3 – have long term charters while Naga 1 is being refurbished to enhance its lifespan and is expected to start contributing by end 2012.

UMW’s oil and gas division, anchored by its pipe manufacturing activities, was supposed to have been listed a few years ago. But the plans were up in tatters as the pipe manufacturing business was hit by intense competition.

The operations of UMW’s oil and gas division are expected to improve for the rest of 2012. The improvements in the oil and gas division are to come from the increased charter rates for the Naga 3 jack up rig and three contract service secured by the division in recent months.