Ezion poised for a rebound after AMS backs off from lawsuit

Both firms will now continue their partnership.

A report by DBS said that Ezion’s share price is poised for a rebound after Atlantic Marine Services (AMS) withdrew its lawsuit against the rig builder.

AMS decided to withdraw its lawsuit against Ezion following a change in its management. Both companies are now looking to continue their partnership in the North Sea.

“We believe its stock price would soon recover to the S$1.20 level, prior to the emergence of a dispute
with rig-operator partner Atlantic Marine Services (AMS), following AMS’s withdrawal of its lawsuit against Ezion,” said DBS.

Here’s more from the report:
Ezion is well-positioned to benefit from the rising popularity of liftboats in this region, capitalising on its first-mover advantage.

We believe service rigs are in an early growth phase, buoyed by the substitution effect to replace typical work boats/barges in this region. 

Ezion has a prudent business model. Fleet expansion is backed by long-term charters of 3-5 years. Demand is also relatively more resilient as service rigs are exposed to the production phase in the shallow water segment.

Only 10-20% of Ezion’s fleet, largely in Mexico, are deployed for developmental drilling which see relatively higher risks of cancellations amid low oil prices.