STX OSV eyes Petrobras orders with new yard

Singapore-listed offshore vessel builder STX OSV (STXO.SI) expects to triple its production capacity in Brazil to as many as 10 vessels per year by 2013, when its second yard is slated to be fully operational.

Analysts said the additional yard could give the firm more firepower to capture orders for high-end support vessels worth up to US$100 million ($122.5 million0 each from Brazilian state oil company Petrobras (PETR4.SA).

STX OSV currently has one yard in Brazil that annually manufactures 2-3 vessels. Construction of the second yard is scheduled to begin in the second quarter this year and the investment cost is around US$100 million.

 

“The capacity of the second yard is around 7 vessels a year when it’s fully up and running. Our target is to fill our capacity in the coming years and Petrobras is an important end user of the vessels,” STV OSV CEO Roy Reite told Reuters.

 

The first project at the new yard will be to build 8 liquefied petroleum gas carriers worth a total of around NOK3 billion ($696.2 million) for Transpetro, an oil and gas transportation unit of Petrobras.

 

STX OSV expects to start construction of the first carrier in the second half of 2012 and deliveries are likely to be staggered from 2014 to 2016.

 

“Looking at their market share in Brazil, STX OSV stands a good chance of winning Petrobras orders,” said Jason Saw, an analyst at DMG & Partners Research.

 

“3-4 vessels per annum from Petrobras related tenders is possible over the long term,” he added. Saw has a buy rating and a target price of $1.75 on the stock.

 

STRONG ORDERS

Reite said strong oil prices have boosted global oil field development after a lean period following the financial crisis, and the demand for supporting vessels.

 

STX OSV has 46 vessels in its order book by the end of the first quarter this year but he declined to disclose the value. In the whole of 2010, the firm clinched contracts for 27 vessels worth a total of NOK12.6 billion.

 

Credit Suisse said in a report that its estimate of STX OSV’s order wins in the year to date, excluding the Transpetro contract, is around NOK2.5 billion. This represents about 17% of its 2011 order forecast of NOK15 billion.

 

The brokerage added that the order momentum for STX OSV is expected to remain strong. It has an outperform rating and a target price of $1.55 on the stock.

 

At 10:11 a.m., STX OSV shares were down 2.7% at $1.09 on a volume of 1.7 million shares, the lowest since late March.

 

The stock has been soft after reports last month that South Korea’s STX Group was thinking of selling a 20% stake worth around 260 billion Korean won ($295.7 million) in the Singapore-listed builder.  

STX OSV issued a statement on April 26 that “STX Europe has not made any firm plans in relation to its stake in STX OSV”. 

 

STX Europe, which is part of STX Group, holds 69% of STX OSV. The Singapore-listed firm has its operational headquarters, a design center and five yards located in Norway. It also has other yards in Brazil, Romania and Vietnam.