Singapore's Ezra Q2 profit hits 1-year high as subsea unit gains traction

SINGAPORE, April 11 Fri Apr 11, 2014 4:16am EDT

SINGAPORE, April 11 (Reuters) - Singaporean oilfield service company Ezra Holdings Ltd reported its highest quarterly profit in a year thanks to improved performance in its mainstay subsea business.

Ezra spent much of last year struggling with project delays and cost overruns in its subsea unit, which operates vessels that lay pipes and install other equipment on the sea bed.

But increased use of its subsea fleet, even after a rise in the number of vessels, helped push up revenue in the second quarter ended Feb. 28 by 22 percent to $300.4 million.

Net profit for the quarter stood at $19.6 million, the company said in a statement on Friday. That was 34 percent less than a previous high of $29.7 million in the year-earlier period, which benefited from a one-off gain.

"The results are really turning around, because we have now reached the economies of scale," Managing Director Lionel Lee said at an earnings briefing.

In the fiscal first half, the subsea services division made up 65 percent of revenue, up from 57 percent a year earlier, and contributed the majority of the increased revenue, the company said.

Earnings will get a boost over the remainder of the year, Lee said, thanks to the recent addition of four pipelay and construction support vessels, as well as the upcoming delivery of Lewek Constellation - a state-of-the-art vessel capable of laying pipes in water deeper than 3,000 metres.

The company won a contract from Noble Energy involving Lewek Constellation, Ezra said on Friday without disclosing the size of the contract.

Ezra is currently bidding for contracts worth $9 billion, and expects to win 30 percent of them, Lee said.

"There continues to be a strong amount of investment in putting infrastructure in place to produce oil and gas," said Lee.

Ezra focuses on field development, so any slowdown in spending on drilling by global oil majors will have minimal impact on earnings, Lee said.

Shares of Ezra were 0.5 percent lower at S$1.07 after the earnings release compared with a 0.1 percent decline in the benchmark index. The stock is the worst performer among the top 10 Singapore-listed oilfield service companies this year, having fallen more than 21 percent. (Reporting by Rujun Shen; Editing by Christopher Cushing)

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