Ezra 1 (May 08 - Dec 09)

[Musicwhiz]

Quick question.

Is it Ezra canceling the order or Keppel Singmarine canceling?

If it is Ezra canceling the order, is it due to the difficulty in getting the financing loan to see the project through?

I am a bit loss as to what leads to the cancellation.

Both sides have phrased it very politely by saying they are "negotiating" the terms of the contract. The media picks it up as "potential cancellation" during such bearish times. Note that there is no mention of the word "cancel" in their respective press releases, it's the implication which is more important I think.

Ezra has said the financing is all in place, so it's not an issue of financing. It's more of a demand side issue I think. I plan to get more clarification during the upcoming AGM in late Dec.

Cheers....

[Musicwhiz]

Some news from Energy Current on EOC, for reading pleasure:-

Lewek Arunothai draws close to first production
By Hwee Hwee Tan
11/12/2008 11:49:39 AM GMT

GULF OF THAILAND: EOC Ltd.'s first production, storage and offloading vessel (FPSO), Lewek Arunothai, is expected to start production in late November or early December.

The FPSO is undergoing hook-up and commissioning at PTTEP's Arthit project in the Gulf of Thailand. The entire process is expected to take two to four weeks to complete.

Lewek Arunothai is equipped with 725,000-barrel storage and is capable of exporting 175 MMcf/d of gas.

[winston]

From OCBC:-

Prudent cash management. Ezra Holdings (Ezra) has announced that it will be reconsidering the purchase of one Multi Functional Support Vessel (MFSV) worth S$69m at Keppel's Singmarine shipyard. This is one of the six vessels that Ezra has on its newbuild program that it was to add in the next two years to capture the deepwater offshore vessel support business.

With delays and cancellations of deep sea rigs to be deployed in areas like Brazil, West Africa and the North Sea, Ezra is likely to re-look its investments to efficiently utilize its cash flow.

Assuming cancellations. While we understand that discussions are still ongoing, we are assuming that Ezra will not only be canceling this MFSV but another one for delivery later in FY10. This will let Ezra pace out its expansion plans and watch the developments in the oil industry prior to further monetary commitment. In all, Ezra will still be taking deliveries of three MFSV and one AHTS in the next two FYs to grow its chartering business.

Impact on financials. With our assumption of two MFSV cancellations, we see gearing at a more comfortable level for FY09 at 0.2x (prev: 0.3x) and 0.7x for FY10 (prev: 0.9x). We are still in the midst of clarifying the further reduction in capex as Ezra would also not need to purchase some expensive long lead time equipment like engines and generators. This can
reduce Ezra's gearing further.

We are retaining our interest costs assumptions in view of the difficult credit environment but would revisit them when interest costs are proven to moderate down in the subsequent quarters. There will be no impact on FY09 earnings but our model indicates a small drop of about 5% from the topline and 3.5% from the bottomline in view of the loss of one vessel's half year contribution for FY10.

Wise management decision, Maintain BUY. We continue to like Ezra for its focus on the deepwater arena. While new capex plans by the Oil Majors and NOCs are hazy, there are still a record number of deep water rigs that will be delivered in 2009. This will incur the need for deep water capable support vessels.

Ezra could also secure vessel builds at better prices later should steel prices continue their drop. Our SOTP valuation moderates slightly to S$1.17 (prev: S$1.20). Maintain BUY.

[puntmaster]

Good move.

Cutting losses ( may have to forego the deposits paid) , preserving cash.

[Musicwhiz]

News from Offshore Shipping Online, for your reading pleasure:-

Ezra Holdings reviews newbuild plan
News - December 1, 2008

Ezra Holdings Limited in Singapore says it is "proactively reviewing" its orderbook of five multi-functional support vessels (MFSVs) in view of the uncertainty arising from the current financial crisis.

The first of its 30,000bhp MFSV options to come under review is Ezra's most recent order with Keppel Singmarine Pte Ltd.

The newbuild contract, valued at S$69 million, excluding the cost of certain owner-furnished equipment, was placed in May with delivery expected in 2010.

Said Ezra's Managing Director, Mr Lionel Lee: "Just as we have always exercised caution in the past, we are taking a prudent approach by revisiting our capital expenditure plans and exploring our options, even though relevant financing for this vessel has been secured."

"We are positive about our medium-term prospects as enquiries for offshore support vessel charters remain firm. The Group will continue to strengthen its financial position, and will focus on consolidating our integrated solutions approach to become Asia's leading offshore support services supplier to the oil and gas sector."

Just last month, the Group reported a net attributable profit of US$175.4 million for the full year ended 30 August 2008 (FY08), a jump of 157 per cent year-on-year, thanks to an 87 per cent improvement in revenue to US$268.3 million.

The Group's interest cover doubled to 29 times because of strong contributions from its core offshore support and marine services divisions.

It kicked off its current FY09 financial year with a net gearing of less than 12 per cent.

[Musicwhiz]

Some news from Energy Current:-

Monsoon holds up Lewek Arunothai first gas
By Hwee Hwee Tan

12/12/2008 5:22:29 AM GMT

BANGKOK: First gas from EOC Ltd.'s first production, storage and offloading vessel (FPSO), Lewek Arunothai, was postponed to later this month due to bad weather conditions in the Gulf of Thailand.

The FPSO was undergoing hook-up and commissioning at PTTEP's Arthit North project offshore Thailand, but the operations were put off for at least one week due to an arriving monsoon. The installation process is supported by Ezra diving support vessel Lewek Toucan and other contracted vessels.

Lewek Arunothai is equipped with 725,000-barrel storage and is capable of exporting 175 MMcf/d of gas. The vessel is on charter to PTTEP for at least the next three years. Gas production at the Arthit North project is expected to ramp up to 150 MMcf/d.

[winston]

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ezra Holdings Limited (“the Company”) will be held at 15 Hoe Chiang Road, #19-01/02 Tower Fifteen, Singapore 089316 on Tuesday, 23 December 2008 at 10 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the
financial year ended 31 August 2008 together with the Auditors’ Report thereon.
(Resolution 1)

2. To re-elect the following Directors retiring pursuant to Articles 106 and 90 of the Company’s
Articles of Association: -
Mr Lee Kian Soo (Retiring under Article 106) (Resolution 2)
Capt Adarash Kumar A/L Chranji Lal Amarnath (Retiring under Article 106) (Resolution 3)
Ms Lee Cheow Ming Doris Damaris (Retiring under Article 106) (Resolution 4)
Mr Soon Hong Teck (Retiring under Article 90) (Resolution 5)
Mr Soon Hong Teck will, upon re-election as Director of the Company, remain as Chairman of the Audit Committee and member of the Remuneration Committee as well as the Nominating Committee and will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

4. To approve the payment of Directors’ fees of S$336,000 for the financial year ended 31 August 2008.
(Resolution 6)

5. To re-appoint Ernst & Young as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 7)

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without
any modifications:

7. Authority to allot and issue shares up to 50 per centum (50%) of issued share capital That pursuant to Section 161 of the Companies Act, Cap. 50 and the provisions (including Rule 806) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors be empowered to allot and issue shares and convertible securities in the capital of the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares (including shares to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to this Resolution) to be allotted and issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the issued share capital of the Company at the time of the passing of this Resolution, of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to all shareholders of the Company shall not exceed twenty per centum (20%) of the issued share capital of the Company and that such authority shall, unless revoked or varied by the Company in general meeting, continue in force

(i) until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or

(ii) in the case of shares to be issued in accordance with the terms of convertible securities issued, made or granted pursuant to this Resolution, until the issuance of such shares in accordance with the terms of such convertible securities. (Resolution 8)

8. Authority to allot and issue shares under the Ezra Employees’ Share Option Scheme That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to allot and issue shares in the capital of the Company to all the holders of options granted by the Company, whether granted during the subsistence of this authority or otherwise, under the Ezra Employees’ Share Option Scheme (“the Scheme”) upon the exercise of such options and in accordance with the terms and conditions of the Scheme, provided always that the aggregate number of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceed fifteen per centum (15%) of the issued share capital of the Company
from time to time. (Resolution 9)

By Order of the Board
David Tan Yew Beng
Company Secretary
Singapore, 5 December 2008

[winston]

From DBS:-

The lower breakeven level for production projects will mean continued demand for Ezra’s services, while financing concerns over its capex-heavy fleet expansion program have been eased slightly as it reviews its capex plans. Notwithstanding, growth is underpinned by improved charter rates and full-year contribution from recent vessel deliveries. Maintain BUY.

Demand for oil services and equipment providers to be sustained. The significantly lower breakeven level for production projects will continue to create jobs for offshore oil services and equipment providers like Ezra, which together with its Oslo-listed associate, EOC Ltd, should be able to leverage on its diversified fleet to secure more offshore transportation and installation projects.

On cash conservation mode. Amid the current global credit crunch, concerns over financing its large committed capex of c. US$670m have been raised. However, these concerns have been eased somewhat following Ezra’s recent announcement that it is reviewing its orders for its 5 MFSVs, and also signals the group’s preference towards cash conservation. Net gearing is expected to step up to 0.6x by end FY09 and 0.95x by end FY10 from 0.11x currently. However, should Ezra decide to delay/cancel part of their newbuild program, this should help alleviate some strain on the balance sheet.

Growth underpinned by higher rates, new deliveries. Notwithstanding, growth will continue to beunderpinned by improved charter rates backed by long term contracts, as well as full year contributions from recently delivered vessels. Maintain Buy and TP at S$1.25, based on 8x FY09 PE for its chartering and offshore construction businesses.

[Musicwhiz]

Thanks Winston.

I've done a summary of Ezra's FY 2008 AGM highlights on my blog. Please feel free to visit and have a read.

Cheers and Merry Christmas !

Musicwhiz

[iam802]

Halted today.