Oman's Renaissance says time is right for its Topaz Marine unit to enter offshore markets in Brazil and West Africa.
Topaz puts its focus on future oil
The time is right for Topaz Energy and Marine, the Dubai marine services and oil and gas engineering group, to enter offshore markets in Brazil and west Africa, says the company's Omani parent.
"Topaz Marine has the opportunity to replicate its success in the Caspian and MENA markets by following future oil," Samir Fancy, the chairman of Renaissance Services, said in a statement accompanying the company's third-quarter results.
"Markets such as Brazil and west Africa offer significant growth opportunity for Topaz Marine and Topaz Engineering."
After BP's catastrophic oil spill in the Gulf of Mexico, which was followed by a six-month suspension of oil and gas exploration drilling in most US waters, Brazil and west Africa have emerged as global hotspots for deepwater oil development.
Renaissance was "seriously considering" raising new capital for the proposed expansion.
"We must now maximise the scale of opportunity that lies before us," said Mr Fancy. "To this end we have significantly raised the scale and profile of industry, financial and legal advisers to advise us on our options."
Renaissance, the shares of which are listed on the Muscat Stock Exchange, last Thursday posted a third-quarter net profit of US$54.2 million (Dh199m), up 18 per cent from $45.8m of net earnings in the same period last year. Revenues rose 6 per cent to $486.5m.
All three main business divisions of Renaissance - marine, engineering and contract services - posted stronger results, with the biggest increase coming from the marine group.
Topaz Marine has been increasing its fleet of offshore service vessels while the sector worldwide has been retiring more vessels than it has been replacing.
"This trend strengthens our confidence in the industry view that suggests there will be a significant firming of the market in 2011, with 2012 forecasts back to 2008 highs," said Mr Fancy.
Topaz Marine has added two new vessels to its fleet in the past quarter. It immediately started work under contracts in Vietnam and the Gulf of Mexico.
The smaller Topaz Engineering division, which has been affected by the drop in global oil and gas industry spending, enjoyed an increase in business in the past quarter.
During that period, it completed the construction at its Abu Dhabi yard of a drilling ship to operate in the Norwegian sector of the North Sea. It also recently won a $100m contract to build an oil storage terminal in Fujairah.
Renaissance says its contract services group has been appointed master caterer for the second Asian Beach Games, which Muscat will host next month as Oman celebrates the 40th anniversary of the accession of Sultan Qaboos bin Said Al Said.
The company plans $1.36 billion of capital spending between this year and 2012, of which it has spent $250m to date.
"We now have the capital in place to meet the entire 2010-2012 investment programme within the company's strong cash flows and headroom for leverage on our balance sheet," said Mr Fancy.
"This leads us to turn our attention to what happens next."