New Boost for Swiber Holdings’ Business

Swiber Holdings (SGX: AK3) is part of Singapore’s fast growing offshore support services sector within the oil & gas industry. The company’s focus is on the provision of offshore construction, offshore marine, and offshore engineering services.

On Monday, Swiber had announced a new deal worth US$80 million. The deal is for an Engineering, Procurement, Installation, and Construction (EPIC – how’s that for an acronym?) contract for subsea development work in Latin America. With that, Swiber’s year-to-date contract wins had grown to US$315 million.

Work starts immediately

The project had “commenced right away” and the company expects it to be fully completed by next year. Swiber sees Latin America as an important region to expand its services. It has previously accomplished a successful project in the region for Pemex, the Mexican state-owned oil company, in the construction of a 77km long submarine duct.

Investors should keep an eye out on Swiber’s progress in Mexico. That’s because the country is exposed to the growth potential that’s latent in the Gulf of Mexico, one of the most important oil & gas regions in the world. If Swiber gains a strong foothold in the country, it will be a good development for the company.

Besides Latin America, Swiber has also been actively looking for more opportunities in other emerging markets such as West Africa.

What does the contract win mean for Swiber?

The latest contract win is an important milestone for Swiber as the company had been seeing its book order decline over the past few quarters.  For instance, Swiber had an order book of US$1.1 billion as of May 2013 and that had declined by almost half to US$650 million as of May 2014.

Swiber has also seen its revenue drop sharply last quarter. The project win is a boost for Swiber and hopefully, it will have more wins in the coming months as a larger order book would mean higher future revenue and that brings with it the prospects for higher profit.

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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.