Mermaid_CommanderDemand for Mermaid Maritime's vessels remain strong despite the oil price plunge. A US$50 million 2-year charter contract for its dive support vessel with ROV service (Mermaid Commander) begins this month. Photo: Company

MERMAID MARITIME is benefiting from OPEC's determination, in the face of depressed oil prices, to crowd out competitors that have a marginally high cost structure.

OPEC has kept up its supply of oil and remains profitable because most of its oilfields are in shallow waters, translating into lower break even cost of production.

Baker Hughes data shows that the number of oil rigs deployed in the Middle East is now at a record high (155 units in February 2015 versus less than 100 units 5 years ago) even as rig count plummet in America, which has seen a fall in shale oil production.

250_chalermchai mahagitsiri_10.14CEO Chalermchai Mahagitsiri. Photo: CompanyWhile the plunge in crude oil prices has hit many offshore oil & gas players, the increased oil production in the Middle East means a steady stream of work for Mermaid Maritime, an 
offshore drilling, subsea, maintenance and logistics services provider.

Mermaid generates 70% to 80% of its profits from the Middle East.

The decline of oil prices has impacted its profit margins, but demand for the Group’s offshore charter fleet remains strong, according to Mermaid Maritime Executive Vice President of Investor Relations, Mr David Ng.

Mr Ng was speaking during a teleconference for analysts on Mon, 27 April 2015.

The Group’s CFO, Mr Katarat Suksawang, also took part in the discussion.

The 3 Asian Offshore Drilling (AOD) high-spec jack-up rigs that Mermaid has equity interest in are enjoying high utilization rates and charter rates as they are deployed in the Middle East.

Mermaid owns a 33.76% stake in AOD, which contributed about 60% of the Group’s FY2014 pretax profit.

(Seadrill owns the remaining 66.24%.)

AOD is expected to contribute even more significantly in the current financial year, as 2 of the 3 AOD rigs were under construction during 1QFY2014 and therefore did not contribute a full year’s activity.

The Group posted profit attributable to shareholders of US$45.2 million for FY2014, up 186.8% year-on-year.

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