Singapore is a regional hub for the oil and gas industry in Southeast Asia and there are also many oil and gas stocks listed here (54 as of 4 November 2014, according to the Singapore Exchange). While having variety is a positive, it can also be confusing for most retail investors (myself included) when trying to differentiate between the oil and gas services providers. In here, I’d attempt to point out the key differences between two of the larger Singapore-listed service providers in the industry: Ezra Holdings Limited (SGX: 5DN) and Ezion (SGX: 5ME). Apart from having relatively similar names, the…
Singapore is a regional hub for the oil and gas industry in Southeast Asia and there are also many oil and gas stocks listed here (54 as of 4 November 2014, according to the Singapore Exchange).
While having variety is a positive, it can also be confusing for most retail investors (myself included) when trying to differentiate between the oil and gas services providers.
Apart from having relatively similar names, the two companies are actually quite different in nature.
Ezra’s business is segmented into the following:
- Offshore Support Services, which is in the business of owning and chartering offshore support vessels.
- Marine Services, which supplies marine gas and oil and provides engineering, design and fabrication works.
- Subsea Services; this is Ezra’s largest segment (70% of revenue in financial year ended 31 August 2014) and it deals with Subsea, Umbilicals, Risers and Flowlines (SURF) installation, subsea inspection, maintenance and repair (IMR), well intervention, and drilling and decommissioning.
The company’s Marine Services segment is actually one of the largest self elevating unit (SEU) fabricators in Asia. A self-elevating unit is basically a mobile platform with movable legs that is capable of raising its hull above the surface of the sea; a jack-up rig is a type of SEU.
Meanwhile, SURF Installation helps install the infrastructure of pipelines, electrical cables, and other features during the construction of an offshore facility.
Ezra has seen strong revenue growth over the years and to that point, its revenue had more than quadrupled from US$353.6 million in FY2010 to US$1.49 billion in FY2014. Unfortunately, the firm’s profit did not follow the same trend. Despite the growing revenue, Ezra’s net profit fell from US$76.7 million to US$45.3 million over the same period.
As for Ezion, it owns and charters oil and gas assets such as offshore logistics support vessels, liftboats, and jack-up rigs. Its logistics support vessels include tugs, ballastable barges, self-propelled barges, and others.
From 2010 to 2014, Ezion’s revenue has tripled from US$117 million to US$387 million. But unlike Ezra which had a growing top-line but falling earnings, Ezion’s profit had managed to quintuple from US$40 million to US$224 million.
The oil and gas services sector can be complex and intimidating. As such, an understanding of the basic operations of a services provider can be a good starting point for investors who are interested in this field.
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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 writer Stanley Lim doesn't own shares in any companies mentioned.