Sembcorp Marine's order pipeline could hit $3b in 2018

The biggest deal is an FPSO contract for Rosebank’s estimated to be worth US$2b.

Sembcorp Marine could recover from losses through its order pipeline which could reach $3b in 2018, DBS Equity Research Pei Hwa Ho said.

“This trend is expected to continue and Sembcorp Marine is responding to an encouraging pipeline of enquiries and tenders for innovative engineering solutions,” OCBC Investment Research (OIR) commented.

Also read: Sembcorp Marine sank into $55.62m loss in Q2

Ho revealed that the deals may likely include a $1b modularised LNG exporting terminal, two large compressed gas liquid carriers for SeaOne Caribbean worth $800m in total and an FPSO contract for Rosebank’s estimated to be worth US$2b ($2.72b).

The firm has already secured $730m worth of new orders YTD.

In addition, Ho thinks that the deal to sell nine jack-up rigs to Borr Drilling as well as the disposal of harsh environment semi-submersible rig West Rigel have eased the firm’s key concerns.

OIR noted that most deals are for offshore production project.

“Looking ahead, whilst improvement in global exploration and production (E&P) capex is projected to continue, management mentioned that it will “take some time” before there is a sustained recovery in new orders,” OIR commented.

New business opportunities have sprouted amidst the group’s transformation efforts to move up the value chain. However, significant time and effort are both required before orders are secured with potential customers.

“Such new-build EPC projects have detailed engineering and construction planning phase, which may take as long as six to 12 months before main construction activities and corresponding revenue recognition can take place,” OIR explained.