At the first place, we are not sure if this is driven by PNB. It came out in the Edge way back in February stating that it was UMW's President that went to see Ekuinas in Q3 16 on this merger. At that time, the current PNB CEO has already left Ekuinas for a long time and just joined PNB. So it was not really something that was structured by the current PNB CEO when he was in Ekuinas. Perhaps, he may even know a lot of skeletons in Icon or Orkim when he was in Ekuinas and now being the resistant in this merger. Coincidently, he was also appointed as the Deputy Chairman of UMWOG when this proposal was announced.

UMW minorities are likely to support the demerger because UMWOG is pulling the parent company down. In fact, UMWOG is getting too big for UMW to swallow and at the sametime, UMW also needs to commit capital for expansion in UMW Toyota. To sweeten the deal, the minorities will get UMWOG shares as dividend.

UMW currently does have its own O&G business apart from UMWOG. That's why they also have big impairment.

I am talking about the demerger, not the merger.

The demerger is still likely to happen. Very embarrassing if minority shareholders disapprove it in the upcoming EGM. With UMWOG out of the UMW group, some reduction in intangible value is expected as UMWOG no longer can use the UMW brand or subject to UMW's supervision. Just imagine if the management can make so many mistake under the supervision of UMW, you can expect worse when they are on their own.

I believe the Head of Drilling and Supply Chain have changed but everyone else remain the same. For directors, Ken and Fina have left. The deputy chairman should take over as chairman soon. The downturn is affecting all oil and gas companies but it's a matter of readiness and risk management in place. The company expanded tremendously during the good times without securing steady long term financing. The rigs may also been bought at higher price through speculators due to the desperate need for new rigs during that time. This is because rigs normally need 2 years to complete. It is not possible for them to announce acquisition of Naga 6, 7 and 8 and then, took delivery within a year unless they bought through speculators that have booked the rigs in advance. Well, those were the good times. And being a new player, the day rates may have to undercut competitor, hence, earning less than it should be to withstand the downturn. Some may argue the lower day rate was justifiable being a long term contract but what's the point of having a long term contract when the oil company can suspend the contract anytime without compensation.

By the way, the CEO of Bumi Armada has been changed. You can't just blame the industry and get away.

Still a good deal to Icon shareholders if you opt for the cash, Icon share price was way below 50 sen before the announcement on 19 Jan. Anyway, there is no guarantee the merger will proceed while the demerger will be decided in the upcoming UMW's EGM.

GLCs are like that, decision making process is very slow cos nobody dares to stick their neck out. Everyone looking after themselves first, not the company.

If you have been involved in the IPO committee of a "soon to be listed" company, you will note that their sole objective or KPI is to list their company at the highest possible PE using all sorts of justification. So IPO price is always overpriced.

http://oilprice.com/Energy/Energy-General/Is-Aramco-IPO-Behind-Saudi-Eagerness-For-OPEC-Cut-Extension.html

No, you don't buy even if crude oil hit 100, just pose those questions i suggested in my post earlier during agm, it will give you some hint if this company is investable even for long term, concern like further impairment, interest rate, potential idling rigs etc. Don't get too excited if this company gets new contract over the next few months, if any. The share price may rise due to such good announcement but take that as an avenue to get out.

Yeah, when Alam Maritim, THHE and Perisai dropped below RM1, how much worse can it be? Well, 80 sen and 10 sen is still a big difference. Even if the share has hit the bottom, it can remain at the bottom for quite sometime. It will bounce back one day, you just wait but money is stuck there in the meantime.

Banks will still finance oil and gas companies, just that the margin of financing is lower, interest rate is very high and many other unfavourable terms. Petronas will take care of local companies but they must still match their price to current market price and if they can't make money at that price, too bad.

The future is bright indeed if they can survive this downturn as other bigger players like Seadrill are on the brink of bankruptcy. Just pray that there is no other new players coming in and spoil the market with a lower rate because assets are dirt cheap now. Actually this is the best time to go into offshore drilling business, if only you could get financing from bank. Unfortunately, those that started off at the peak will have to slowly crawl out from the bottomless pit.

There is no synergy in the merger. I have not seen drilling and OSV services being packaged under one contract. Icon's vessels are low capacity engines which are plenty in the market. I don't think their utilisation is fantastic. It is also quite difficult for the management of the enlarged group to report to both PNB and Ekuinas. But I think the demerger is likely to happen because UMWOG is just too big for UMWH to hold. PNB will pump in money via rights issue and that dilutive effect will happen and I believe, already well priced in.

Even if oil price rise above 60 or all their rigs got a contract, it will take sometime for this company to be profitable. The day rates will always lag the oil price.

Actually, even at low oil price, oil companies cut down on capex but not so much on opex. This is where this company can deploy their HWU to do well maintenance. Unfortunately, please read through their announcement and see when was the last time their HWU won a contract. I think all their HWU assets are kept in Kemaman now waiting for job, if that is what ragesliew wants me to see in Kemaman.

They been to many Asean countries in the past but what's past is past. The people with the experience working in those countries would have got retrenched by now. What is the chances of this company getting another foreign contract again? In Indonesia, there is Apexindo. In Vietnam, there is PVD. Want a job there? Go queue at the back. In countries where there is no locally based drilling companies, there are many drilling companies (with established track record) bidding for that same contract. If you follow this company, you will note that there was also one moment when they were eager to enter Middle East.

Their assets financed by short term loan was really a bad decision. If you invest with your own money, would you invest in an asset with 25 years lifespan if the bank will only give a 5 year loan and expect you to rollover every 5 years? That's high risk to me. What if the bank pull back the loan? Perhaps, in the upcoming AGM, please ask if the management able to rollover all the short term loans and if so, at what rate? This information is important in determining their breakeven day rate.

With regards to the merger, please read the Edge few weeks ago. It was stated that the CEO of UMWH actually initiated this. It happen at a time when the current PNB's CEO has left Ekuinas for months. So, it may not necessarily be a done deal as PNB may not want to co-own the enlarged group with Ekuinas.

Please don't buy just because the share price is low and think that oil price will bounce back. The oil price had remained very low throughout the 90s although there was Iraq war. And that scenario could happen again. Actually, the current oil price is not low, it is a new normal.

Omg, what happen, the dividend so low one? Is it because of the private placement and now have to share the profit with more shareholders?

Before we even talk about impairment reversal, is the impairment even adequate at the first place? Why there is a big impairment hit in FY16 when the downturn happen so long ago? Try doing a ball park analysis to check whether the assets are still overvalued by comparing against a brand new rig waiting for job at the ship yard which is now only costing USD155m. You can get this info in the internet. Take note that some of their rigs were bought with the cost above USD200m. Refer to their announcement dated 6/2/14 and 12/2/14.

Not sure about PNB. There is a limit on how much Petronas can take care of them. Even if Petronas can award all their rigs with a contract, is the contract value sufficient for them to breakeven due to their high entry cost? I don't have the answer but we can pose them during the upcoming AGM.

Let's analyse logically. What is causing the oil price to plunge and whether that cause is still around or has been eliminated? That will tell you whether oil price will go higher or not. In the meantime, brace ourselves to the new normal.

By the way, other countries are giving priority to their local oil and gas suppliers so it is expected that Petronas to do the same. If merely based on track record alone in awarding contracts, there is no way our new local suppliers can compete with established international companies.

Too late. Value of assets has dropped. Not sure if the market value today can cover the loan taken to acquire the relating asset. This is what happen when you buy too many assets at the peak. The best of all is buying with short term loan. Now I know why Petronas, despite having the financial muscle, does not own a single rig. The answer is so obvious now.

At times like this, who else will subscribe the rights issue besides PNB and Ekuinas. Without the cash from rights issue, the company will continue to pay a lot of interest and very difficult to go back to profitable position. The bigger question is, can they do this loan reduction exercise without having to involve Ekuinas which will end up having to merge Icon and Orkim. As most analysts wrote, there is no synergy in this merger. Three of them do different activities.

What is coming to an end now is Opec's ability to control oil price. Not sure about other countries, the reason Shell is selling the refinery here is because it needs a lot of money to upgrade while the margin is too thin for the upgrade to be commercially viable.

Arab already know from the beginning that production cut won't work. It will only buy time for shale producer to improve further and reduce their breakeven price. It has now come to a time where it's either shale producer or offshore producer has to die for the price to go up. Unlike shale producer where they can start and stop production quite easily, many offshore producers (and its related service contractors) has sunk in their capex investment with a very high long term oil price assumption.

By the way, whatever long term contracts secured by service contractors amount to nothing if the oil company can suspend the contract anytime without compensation. They are always at the mercy of the oil companies. So in the next few weeks, if oil price drops badly, offshore drillers can expect contract suspension again.

PNB has always been the largest s/h of umwog, difference is going to be direct shareholding, currently indirect via UMW. I believe there is a limit of how many drilling contracts petronas can award. I just remember that sapura also has more than 20 tender rigs. Perisai has 3. Can petronas take care of everyone?

Whether the impairment will be written back depends on the assumption used in calculating the impairment, something to ask in the next AGM perhaps. Most importantly, all rigs need to have job for the company to turn around, not just one and two short term contracts to pass time. Also take note that contract value not disclosed. This is an important info as it tells whether the contract is profitable or not. Petronas can take care of local contractors but I doubt it has jobs for all the 8 rigs. There is also Perisai to take care.

Only CPs relating to due d deemed fulfilled if no notice within 4 weeks. Still need lenders' approval. Not just Icon's lenders, but lenders of UMWOG and Orkim as well.

Try asking the management in the upcoming AGM whether there will be another round of impairment if oil price remains below USD60 or whether all rigs will be utilised by year end. Unutilised rigs are actually burning money and profits from utilised rigs, if any, may not be enough to maintain idling rigs. This will give some hint whether the company can be profitable for FY17 and the hope of crawling back to RM1.

This stock rallied because it is valued at 50 sen in the proposed merger. Imagine if the merger can't proceed, the price sure drop. Noted that the proposal has condition precedents, one of them is lenders' approval. In addition, sometime, if there is any findings in the due diligence, that 50 sen value can be revised.

Whether this stock worth buying or not depends on future outlook of oil price, if price hovering below usd60, it's hard for this company to be profitable as i believe most of its assets were bought during the peak oil price except for maybe naga 1, 2 & 3. Although oil price has found a bottom, it's hard for oil price to rally because US keeps on adding new rigs to increase production while opec cut production. The merger with icon and orkim is not going to make a big impact. Icon also in loss position. Orkim although has income stability, don't think it is significant to make a difference on the enlarged group.