SapuraCrest (SapCrest) announced on 17 Feb 2012 that it has inked a joint venture (JV) agreement with Seadrill Ltd (Seadrill) in relation to the building, construction and operation of 3 units of pipe-laying support vessels (PLSVs) for the RM4.4bn Petrobras contract. Both parties will hold equal stakes in the holding companies which will own and operate the 3 vessels (50:50 JV). 2
out of the 3 vessels (550-tonne PLSVs) are currently being constructed by IHC Offshore & Marine B.V. (Netherlands) and will be delivered from 4Q2014 onwards. Another vessel will be constructed in Brazil as stipulated in the contract with Petrobras. Initial capital outlay is around US$300m (US$150m each or RM450m). Based on the 10% deposit announced, the 2 vessels work
out to cost US$486m, while the third vessel will be slightly smaller than the first two. (Bursa Malaysia announcement)

Comment: This news confirm the highly speculated rumours that SapCrest would rope in a strategic partner in the Petrobras job due to the huge capital outlay to build and operate the vessels. We expect the total cost for building the 3 vessels to be US$720m (RM2.2bn). This is the first PLSVs JV with Seadrill for SapCrest. Previously, SapCrest and Seadrill jointly owned (51:49) 4 tender drilling rigs. Seadrill stand a chance to win more contracts in the Petrobras US$224bn capex plans for the pre-salt exploration and production systems in the Santos basin. To date, Seadrill through its subsidiaries has secured 3 semi-submersible drilling rigs and 3 PLSVs long term contracts with Petrobras.

For illustrative purposes, net debt and net gearing for the company will increase from RM152m to RM608 and 0.1x to 0.5x, as at 31 Oct 2011.. Assuming a net margin for the project to be 6%, it will contribute RM130¨CRM150m over 3 years to SapCrest's bottomline, from mid-2013 onwards. (Azree Azhar)