Swiber may lose to Punj Lloyd in subsea project bid

Despite its highest bid of US$148.87m.

Citing Upstream, OCBC Investment Research said that Punj Lloyd is poised to win a US$131.45m contract from India’s state-owned ONGC to lay subsea pipelines and execute topside modification work for the B-127 field development in India. 

OCBC noted that Swiber was one of the bidders for the project (along with Larsen & Toubro, Essar and a consortium involving Great Offshore and Hyundai), and was the highest bidder with a price quote of US$148.87m, according to Upstream sources. This is a 13.3% difference from Punj Lloyd, who was the lowest bidder.

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Still bidding for other projects
Meanwhile, Swiber is still bidding for other projects; management has been upbeat regarding its potential pipeline for work not just in Southeast Asia.

For instance, Mexican state oil company PEMEX is preparing the pre-qualification phase for a significant transport and installation contract covering the multi-platform Ayatsil heavy oil field development in the Bay of Campeche.

The contract, in terms of the entire package, could be one of the most expensive in Mexico for this type of job, with an estimated price tag of up to US$300m1.

Swiber’s order book stood at about US$1.35b as at end Feb 2013, and about 50% of it will be recognized in FY13. Management also previously updated that out of the US$2.4b worth of projects that it had bid, about US$500-600m are for work in FY13.

Despite the positive industry outlook, we would
continue to monitor operating margins and cash flows of the group. Meanwhile, the stock price has fallen by about 1.6% YTD vs the STI’s 6.9% rise.