x Abu Dhabi, UAEThursday 27 July 2017

Maridive downgraded on delay of pipe barge

No impairment of company's long-term prospects expected.

Shares in Maridive and Oil Services took a dip as delays in the delivery of its new pipe-laying barge are expected to cut into the company's profits.

EFG-Hermes cut its recommendation for the Egyptian oil services company to "neutral" from "buy". Maridive shares, which are denominated in US dollars on the Egyptian Exchange, retreated 1.8 per cent to US$3.66. The price has fallen almost 3 per cent in the past three sessions.

Estimates for full-year revenues this year were also cut, by 14.5 per cent to $420.6 million, to reflect the delay of the new barge, called the Valentine DLB 1600, said Nadine Hassouna, an analyst at EFG-Hermes. The barge is expected to be a major revenue generator for Maridive but is now predicted to join the company's fleet in the third quarter of this year. The company had originally said it was scheduled for delivery by early this year, Ms Hassouna said. She has a target price of $3.86 for the stock.

But despite the downgrade, Ms Hassouna said "the long-term picture remains positive for Maridive", with revenues predicted for next year unaffected.

"The global oil and gas industry is entering into a recovery phase spurred by the recent strengthening in oil prices. This should increase Maridive's chances for additional contract wins, which would increase earnings visibility further and could trigger an upgrade to our forecasts," she said.

Oil closed at $91.54 per barrel on the New York Mercantile Exchange on Friday and some industry experts believe it could top $100 a barrel by the end of this year.

A stronger-than-expected recovery in the offshore support vessel segment could "also provide upside potential to our numbers", Ms Hassouna added. Those craft are smaller than barges and provide support to oil platforms by supplying food and equipment for workers. The company reported net earnings of $25m in the third quarter of last year, up 261 per cent compared with the same period in 2009. It said the rise was mainly driven by its offshore construction service units on a project it had been awarded with Saudi Aramco.

 

fhalime@thenational.ae