Singapore's Ezra to expand in Western oil service

By Ovais Subhani and Neil Chatterjee

SINGAPORE (Reuters) - Singapore oil services firm Ezra Holdings (EZRA.SI: Quote, Profile, Research, Stock Buzz) plans to expand in the western hemisphere by buying firms with offshore vessels or yards to tap higher charter rates in a booming energy exploration industry.

Managing director Lionel Lee said on Thursday the company will be looking to expand in the Gulf of Mexico, Brazil, North Sea and West Africa, which could add 20-30 percent to its revenue growth. But it would avoid working in Nigeria where he believed the security risks were too high.

"We plan to grow in those regions more by acquisitions rather than grow organically. We are looking at companies in businesses similar to ours," Lee said in an interview as part of the Reuters Energy Summit.

The acquisitions could be funded by debt rather than by sale of new shares, he said, but declined to give any value.

Ezra rents out offshore rigs and vessels such as anchor handling tugs that support the industry, almost all contracted in Asia and the Middle East so far, except for one in West Africa. Top rivals include A.P. Moeller Maersk (MAERSKb.CO: Quote, Profile, Research, Stock Buzz) and Prosafe PRS.OL.

Lee said Ezra has recently opened an office in Britain's oil capital Aberdeen to serve its European clients and capture business in the western hemisphere. It aims to list subsidiary EOC Ltd EOCL.NFF on Oslo's main stock exchange by the fourth quarter of this year, after an over-the-counter listing in April.

He said the Western expansion plan would be aided by delivery of 11 more vessels by the end of first-quarter 2008, taking its fleet to 34, with $350 million investments in 2007 and 2008.

"Oil companies are pushing us to become a global player," he said. "We are looking to move some equipment into the North Sea going forward."

Ezra, whose shares were flat at S$5.8 ($3.8) on Thursday, posted a revenue of S$110.3 million and a net profit of S$61.7 million for the fiscal year ending August 31, 2006.

A Reuters Estimates poll of six analysts showed it is likely to make about S$194 million in revenues in 2007 and S$72 million in earnings.

NICHE

The market for oil services has boomed after years of high oil and gas prices that are leading to greater exploration, and Lee sees a niche in serving the move to ever deeper waters with its technology for mooring floating vessels.

"That's where the industry is moving to and we have to move in that part of the segment if we want to be relevant. Not only Brazil and West Africa but even Malaysia and China are going deepwater."

The firm had operations in Nigeria in the mid-1990s but is avoiding returning to Africa's largest oil producer following an 18-month campaign of violence against the industry that has slashed its output by about a quarter.

"The returns are extremely good. But you put a lot of people at risk. Nigeria -- we'll it a give a miss right now," he said, despite oil service returns there at double the market rate.  Continued...