Edison Investment research has issued an outlook update on Medserv plc on the back of the recent announcement of the FY18 results and directors’ interim statement for Q1 2019. Quoting the report, Edison stated that “Medserv is now truly expanding internationally, and appears to be increasingly verifying its credentials”.
The interim statement issued by the directors of the company reported a group turnover for the first quarter of 2019 that is 51 per cent higher than that achieved in the first quarter of 2018, resulting in EBITDA improving by 157 per cent over same period last year.
According to Edison, the Suriname offshore base management contract is a prime driver of significant improvement in FY19, with group revenues set to almost double. Other territories also reported progress, notably in Egypt, Cyprus and Malta, with potential for significant new opportunities for this year for both ILSS and OCTG operations.
“We would regard 2018 as a year of transition for Medserv. New operations in Egypt commenced, Cyprus oil discoveries transformed prospects for the base, Oman OCTG operations were transferred to the new facility at Duqm and the Suriname base management contract not only extended operations beyond the EMEA region, but also introduced management services as a new and sizeable revenue stream,” the report said.
In their interim statement, the directors also provided a trading update on the group’s various operations across the globe. The Malta business unit continues to support the offshore Libya Bahr Essalam Phase Two project. Despite the conflict in Libya, all client operations have continued without any disruption using Medserv’s base in Malta as the shore base for these operations. The company has also secured various engineering work engagements from the oil majors operating in Libya.
During the first quarter of 2019, the company supported ExxonMobil’s offshore drilling campaign which resulted in a significant gas discovery in Cyprus. The discoveries offshore Cyprus by ExxonMobil and ENI have led to an increase in exploration drilling campaigns scheduled to commence in the last quarter of the year.
Medserv, being the first international shore base logistical company to operate in Egypt, enjoys first-mover advantage. The company has been contracted to carry out additional services in the coming months and other international oil companies are showing interest to subcontract their shore base logistics to Medserv.
The company’s operations in Suriname have kicked off successfully. The State oil company has commenced its nine-well near-shore drilling programme and has already drilled one well. ExxonMobil’s successful oil discoveries in neighbouring Guyana have raised optimism of a major discovery in Suriname.
“Improved market conditions, increased drilling projects and a track record of successful delivery of projects, are key in supporting the company’s growth in earnings. The results for 2018 showed a significant increase in group earnings and performance. We are excited about the prospects for 2019 and expect the performance this year to continue to improve,” Karl Bartolo, CEO Medserv Group, said.
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