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US$236 Million Worth of New Business for Sembcorp Marine

Sembcorp Marine (SGX: S51), a subsidiary of Sembcorp Industries (SGX: U96), is one of the largest marine and offshore engineering groups in the world that competes mainly with other similar outfits from South Korea and China.

More business for Sembcorp Marine

The company announced today that its subsidiary, Jurong Shipyard, has obtained a new US$236 million order from Hercules North Sea Ltd for a jack-up rig that’s based on the Friede & Goldman Ju 2000E design. Including the new contract in question, Sembcorp Marine has inked a total of S$1.93 billion worth of new deals in 2014 alone, bringing its net order book to S$13.2 billion. Those orders are expected to keep the company busy all the way till 2019.

Who is Hercules?

Hercules North Sea Ltd is a subsidiary of Hercules Offshore Inc (NASDAQ: HERO), a company that serves the exploration and production (E&P) sector of the oil & gas industry by providing shallow-water drilling and marine services. The company has global operations and owns a fleet of 36 jack-up rigs and 24 lift boats.. The new rig to be built by Sembcorp Marine is expected to be chartered out to Maersk Oil and Gas after completion in 2016.

Who is Maersk Oil?

Maersk Oil is part of the conglomerate AP Moeller-Maersk A/S that’s listed in Denmark. The conglomerate’s operations include running the largest container shipping outfit, Maersk Line. Maersk Oil though, is involved with the exploration and production of oilfields all over the world with key projects in Denmark, the United Kingdom, the Gulf of Mexico and Qatar.

Foolish Summary

While US$236 million for the new contract – which is in line with company’s focus on building various types of oil rigs and converting different types of offshore platform – seems like a significant sum of money, Sembcorp Marine does not expect any material impact on its financial results for 2014.

Sembcorp Marine closed S$3.95 per share yesterday, giving its shares a price to earnings ratio of 14.8 and a price to book ratio of 3.0.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.