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Stockwatch- Technics Oil & Gas $0.79

CORPORATE PROFILE

Singapore-headquartered Technics Oil & Gas Limited is a one-stop, fully integrated specialist
services provider catering to MNC companies in the upstream oil and gas sector.

The Group designs, concept engineers and fabricates process modules and equipment, including gas compression packages, which are integrated to form the operating system for production operations and storage applications in offshore and onshore oil and gas exploration and production activities. (“O&G”)

From a modest start-up in 1990 with only 12 staff, Technics became a listed entity on the Singapore Exchange SESDAQ in April 2003 and embarked on a multi-pronged expansion programme to maximise leverage on the robust demand in the O&G sector.

With a current strength of 240 full-time employees and still expanding, Technics has now emerged as one of the leading premier supply vendors for topside process modules and equipment required for FPSO (Floating Production, Storage and Offloading) ships and MOPUs (Mobile Offshore Production Units), as well as oil rigs and semi-submersibles.

The Group has been synonymous with safety, quality and reliability and is an authorised integrator of gas compression systems for two world-leading USA gas compressor manufacturers, Ariel Corporation and Cameron.

Main business segments are:
• Engineering, Procurement, Construction and Commissioning (“EPCC”):
Design, procure, construct, install and commission process modules and equipment for O&G exploration and production on a turnkey project basis;

• Contract Engineering (“CE”):
For customers who do not require the full turnkey services, Technics customizes the oil or gas flow and fabricates according to their specifications;

• Procurement and other services (“PS”):
After-sales maintenance service and supply of spare parts and equipment; as well as the Group’s new leasing business for gas compression systems.

The Group’s expanded facilities comprise two waterfront yards extending over approximately
17,000 sqm and 22,500 sqm respectively, in Singapore and Indonesia’s Batam Island.

Business coverage now encompasses Singapore, Malaysia, Thailand, Vietnam, Indonesia, USA, Dubai, Bangladesh and the People’s Republic of China; operating through offices in Singapore, Batam and Vietnam.

Fuelled by a strong commitment to excel and backed by a network of leading MNC customers, major equipment principals and strategic partners, Technics is now poised to embark on a new dimension of growth.

2 Alliances (announced 5 Sep 2006) to springboard into new market segments (Mgmt is optimistic that this generation of new earnings streams will kick in strongly from FY2007):

(i) Strategic partnership with Global Process System (GPS); leased to GPS certain equipment that are typically utilised in the construction and supply of production and process modules to FPSOs and MOPUs. GPS owns and operates jack-ups and MOPUs in this region while partnering others to exploit the booming turnkey business for FPSOs. GPS has accorded Technics the first right of refusal to undertake contract engineering project work for the MOPU/FPSO process topsides, e.g. the supply of gas compression systems; electrical, controls and instrumentation systems; and process equipment vessels. This alliance has quickly ramped up the activities and output of our new Batam Island yard.

Global Process Systems Inc (GPS) provides turnkey services in all areas of process equipment and Process Engineering Solutions for customers in the Oil & Gas industry. GPS is strategically located in Dubai , UAE, Kuala Lumpur, Malaysia, Moscow and Houston, with branch and affiliate corporate offices throughout Europe, Asia and Middle East. GPS is 70% owned by Al Jaber Group, a multi-billion USD conglomerate headquartered in Abu Dhabi with diversified businesses ranging in infrastructure to integrated logistics. For more information about GPS, please visit the company’s website at : www.globalprocesssystems.com

(ii) 51% Joint Operation with an Indonesian partner, namely PT. Promatcon Tepatguna; able to secure EPCC gas c0mpression systems contracts in Indonesia for on both outright purchase by customers or term leasing basis.

Outlook:

a. Management is optimistic: There has never been a better time in the history of Technics when our prospects will be brighter than the present.

b. KeppelFELS, a subsidiary of Keppel Offshore & Marine, a global leader for the design and production of jack-up rigs and a leading player for the conversion of old tankers into FPSO/FSO/MOPU vessels, has been one of Technics' key long term customers.

c. Batam is fast-assuming the mantle as a hub for FPSO process modules benefiting from the spillover effect as customers face long queues for Singapore yards. Large MNC players such as Halliburton and J Ray McDermott have commissioned major projects to yards on Batam Island.

d. Technics' new yards in both Singapore and Batam Island have been qualified by our MNC O&G customers.

e. Technics is focussing on extending the growth of EPCC business for gas compression systems to ride on the strongly emerging demand for natural gas as an alternative energy source to oil.

f. 2 main growth drivers in FY2007:
(i) FPSO market- based on discussion with customers, there are 10 FPSO conversion projects that are scheduled to be awarded by the oil majors in 2007 to leading FPSO players.

With several of Technics' partner-customers in the front-running for these large scale projects, it is optimistic of maintaining our historical participation or strike rate, given its current available capacity as well as proven safety and on-time delivery track records. In particular Technics stand a good chance for EPCC gas compression systems, in view of our authorised integrator status for Ariel and Cameron, which serve as barriers to entry by non-qualified competitors.

(ii) Leasing of Gas Compression Systems- Technics is excited at the upside potential of an emerging leasing trend that has caught on strongly in Indonesia. Its Joint Operation in Indonesia has received indicative demand amounting to about 15 gas compression systems in the short-term from its customer base, either for leasing arrangement or outright purchase.

Technics anticipates that leasing will soon catch on in Malaysia and Thailand, paving the way for Technics' 2nd stage development for this new business to expand beyond Indonesia.

There are 3 drivers for the strong emerging leasing trend. Firstly,

posted by gsg @ 2:43 PM