Friday, Mar 24, 2006
MARC has assigned a rating of A+ to Petra Perdana Berhad’s (Petra) proposed issuance of up to equivalent RM800 million Dual Currency Revolving Financing Facility comprising RM400 million Nominal Value Secured Serial Bonds under Tranche 1 and up to RM400 million Dual Currency Revolving Financing Facility under Tranche 2. The rating reflects the Group’s competitive position as an integrated service provider for the oil and gas multinationals; and expected improvement to its financial profile following its venture into the provision of offshore marine support services for the oil and gas industry. Moderating the rating, however, is its relatively high debt leverage following the issuance of the proposed private debt securities.
Against the backdrop of high oil prices and new oil fields, offshore activities are expected to surge in the next five years. This augurs well for Petra’s growth prospects for both its integrated and offshore marine support service businesses. Petra’s commendable operating performance and safety track record will not only enable the company to renew existing contracts but also to secure more integrated brown field services and offshore marine support services contracts. In January 2005, Petra secured a RM600 million contract with Sarawak Shell Bhd (SSB) and Sabah Shell Petroleum Company Ltd (SSP) for the provision of major maintenance, hook-up, commissioning and construction services. Apart from that, SSB and SSP along with Petronas Carigali Sdn Bhd awarded three contracts valued at about RM120 million to Petra in March 2006.
Through its subsidiaries, the Group is involved in an array of services encompassing overall project management, seismic acquisition and interpretation, oilfield optimization, design and engineering, fabrication, installation, hook-up and commissioning. To complement its servicing activities, Petra has formed a new division to provide marine support services to the oil and gas multinationals. Followings the completion of its acquisition of Intra Oil Services Berhad (IOS), Ampangship Marine Sdn Bhd (AMSB) and Pelangi Mitra Offshore Pte Ltd (PMO) respectively; Petra now owns a fleet of 22 vessels, making it one of the largest Malaysian-owned fleet for marine support services to the oil and gas industry.
Going forward, the brown field service division will remain as the main revenue driver, but the offshore marine support services division will be the primary profit driver for the Group. The projected operating profit margin with full consolidation of the new division is expected to reach well above 10%. The current mix of spot and time charterers should be beneficial to Petra as the former would yield higher revenue given the prevailing high market rates, while at the same time the latter would provide the company the comfort of a stable income stream. The estimated yearly contribution from the existing long term contracts (secured by the engineering and services division represented by Petra Resources Sdn Bhd [PRSB], its major revenue contributor) is estimated to value at RM221.8 million per year as at 31 December 2005.
The cash flow projection demonstrates strong cash generation capacity, mainly driven by the offshore marine support services. Historically, funding for capital expenditure was fulfilled by the listing proceeds and operating cash flows but debt leverage increased in FY2004 and FY2005 (unaudited) due to investments in marine assets. Going forward, the pro-forma debt-to-equity ratio is expected to reach 2.25 times following the drawdown of the RM400 million Bonds (under Tranche 1). MARC draws comfort from the fact that the drawdown of the RM MTN and/or USD MTN and/or USD TRCF (Tranche 2 of the Revolving Financing Facility) or any further indebtedness to be incurred by Petra will be subject to the financial covenants (i.e. D/E and DSCR) and the affirmation of the rating at a minimum A+ under the issue structure. The company’s financial flexibility stems from its listing status and unutilized banking facilities.
Against the backdrop of high oil prices and new oil fields, offshore activities are expected to surge in the next five years. This augurs well for Petra’s growth prospects for both its integrated and offshore marine support service businesses. Petra’s commendable operating performance and safety track record will not only enable the company to renew existing contracts but also to secure more integrated brown field services and offshore marine support services contracts. In January 2005, Petra secured a RM600 million contract with Sarawak Shell Bhd (SSB) and Sabah Shell Petroleum Company Ltd (SSP) for the provision of major maintenance, hook-up, commissioning and construction services. Apart from that, SSB and SSP along with Petronas Carigali Sdn Bhd awarded three contracts valued at about RM120 million to Petra in March 2006.
Through its subsidiaries, the Group is involved in an array of services encompassing overall project management, seismic acquisition and interpretation, oilfield optimization, design and engineering, fabrication, installation, hook-up and commissioning. To complement its servicing activities, Petra has formed a new division to provide marine support services to the oil and gas multinationals. Followings the completion of its acquisition of Intra Oil Services Berhad (IOS), Ampangship Marine Sdn Bhd (AMSB) and Pelangi Mitra Offshore Pte Ltd (PMO) respectively; Petra now owns a fleet of 22 vessels, making it one of the largest Malaysian-owned fleet for marine support services to the oil and gas industry.
Going forward, the brown field service division will remain as the main revenue driver, but the offshore marine support services division will be the primary profit driver for the Group. The projected operating profit margin with full consolidation of the new division is expected to reach well above 10%. The current mix of spot and time charterers should be beneficial to Petra as the former would yield higher revenue given the prevailing high market rates, while at the same time the latter would provide the company the comfort of a stable income stream. The estimated yearly contribution from the existing long term contracts (secured by the engineering and services division represented by Petra Resources Sdn Bhd [PRSB], its major revenue contributor) is estimated to value at RM221.8 million per year as at 31 December 2005.
The cash flow projection demonstrates strong cash generation capacity, mainly driven by the offshore marine support services. Historically, funding for capital expenditure was fulfilled by the listing proceeds and operating cash flows but debt leverage increased in FY2004 and FY2005 (unaudited) due to investments in marine assets. Going forward, the pro-forma debt-to-equity ratio is expected to reach 2.25 times following the drawdown of the RM400 million Bonds (under Tranche 1). MARC draws comfort from the fact that the drawdown of the RM MTN and/or USD MTN and/or USD TRCF (Tranche 2 of the Revolving Financing Facility) or any further indebtedness to be incurred by Petra will be subject to the financial covenants (i.e. D/E and DSCR) and the affirmation of the rating at a minimum A+ under the issue structure. The company’s financial flexibility stems from its listing status and unutilized banking facilities.