Medserv registers €3.3 million earnings before interest for six-month period

Medserv plc have issued their interim results where the group report a reduction in turnover compared to the same period last year, attributed mainly to a slow-down in the provision of shore base logistics as a result of exploratory drilling activity in Cyprus being put on hold. 

Revenues from shore base logistics in Portugal was also minimal as environment concerns raised by local government delayed the start of drilling activities to year 2017. The pressure on prices and margins across the Group as a result of the low oil price also contributed to this reduction.

The Group registered an earnings before interest, tax, depreciation and amortisation (EBITDA) of €3.3 million for the six-month period.

The Group results for the second half of the year are expected to be in line with forecast because of a further increase in the business of METS, Medserv said in a statement.

“However the overall Group result for the year will be lower than forecast. As a result, the Group reports that the revised forecast for the year is being restated at €38 million. The Outlook remains positive with a healthy business pipeline.”

Medserv said that the shore base in Malta has successfully negotiated and renewed a contract with an international oil company (IOC) for a further two years to provide integrated shore base services in support of the further development of the Bahr Essalam field offshore Libya. This will result in additional contracts negotiated with service and engineering contractors supporting the development of this field. 

In addition a tender has been issued by another IOC, also in respect of support to existing offshore Libya operations. The Group has bid for this work and the tender documents are presently being adjudicated.

The Cyprus subsidiary has renewed its lease at the Larnaca base for a further year, to end of August 2017 and is continuing to provide shore base services to ENI, though at a very low level.

The subsidiary has also responded to a tender from another IOC to provide shore base services in support of drilling operations offshore Cyprus. The outcome of this bid is awaited.

In addition, the Government of Cyprus has recently announced the names of the bidders for blocks in a new licensing round for concessions to drill offshore Cyprus. The subsidiary’s existing customers are well represented in the bidder list. Drilling activity is expected to resume in year 2017.

As previously reported, the Group has made a bid for a substantial shore base contract in Trinidad. The outcome of this is expected this quarter. The Group is also actively working to penetrate the market in Eygpt as opportunities present themselves, with a possibility of having the first breakthrough before the end of this year.

Following the METS acquisition earlier this year, the business of integrated oil country tubular goods (OCTG) is exceeding profit expectations. With regard to Oman a healthy business pipeline is expected to continue as the subsidiary is in advanced negotiations with its main customer to secure a long term contract. The Group reports that the UAE operation is on budget but operations in Iraq are suffering significantly from the continued political instability in the country. Steps are being taken to reduce operational costs in Iraq, the benefits of which will be realised in next year’s results.

“Medserv is positioning itself for growth in both main operating segments, ‘shore base logistics’ and ‘OCTG’ in three significant oil and gas markets, Trinidad, Egypt and Iran, before year end. Additionally exploratory drilling is expected to resume in Cyprus and Portugal in year 2017 for which the Group has already contracts in place,” the company said.