Icon Offshore confident of riding out the storm

KUALA LUMPUR: Icon Offshore Bhd, fresh from the aborted merger with UMW Oil & Gas Corp Bhd and Orkim Sdn Bhd, stressed that it has a game plan that will enable it to ride out the storm and transform its future.

Icon managing director Amir Hamzah Azizan said it is even comfortable on the basis of operating on its own without a merger partner.

“We’re a material player here. Can we transform to do something different? I’m sure we can, but these are all opportunistic-driven. If they (merger and acquisition) come out, we will work harder. Our parent company (Ekuinas) is supportive. They will also help us to see how we can transform ourselves,” he told reporters after its AGM yesterday.

Strategic efforts such as restructuring the company’s financial commitments, revamping the business model, reducing operation cost and conserving cash flow are among strategies identified to ride out the downturn. The company has also embarked on a transformation process to develop a more robust business model for the future.

Amir said Icon is now poised to take advantage of the recovering market condition as it has taken necessary measures to bid and secure new contracts.

“In the meantime, we have a good lean cost structure that we’re able to drive utilisation through competitive bidding. The nature of contract and tenders that are being issued now does put us in a reasonably favourable position,” said chairman Raja Tan Sri Arshad Raja Tun Uda.

Cost-wise, Icon is now 37% leaner since the implementation of its manpower rationalisation exercise in 2015. The company has also laid-up six vessels and implemented domestic safe manning. It also reduced overall operating expenditures for vessel operations and administrative expenses, despite stepping up vessel maintenance to increase vessel availability and reliability.

“Based on a fleet of 34, six laid-up vessels and deferred delivery post-2018, we have more than adequate capacity to compete in the spaces we’ve got. If opportunities arise and we’re commercially successful, the management will be keen to look at it,” said Amir.

Learning from the previous merger exercise, he said there are good opportunities that could come up and is looking forward to bundling its services to change the nature of the business and offerings.

“The concept of a stronger service provider is fundamentally important for Malaysia. Malaysia needs its oil and gas ecosystem to be strong, not just Petronas or the public listed companies but the service industry must be strong to support them in the future. We look to the mergers as a means to build a stronger (industry). Doesn’t make sense for Malaysia to be an oil and gas company but the only participant is in the extraction portion, it should also be the whole value chain,” said Amir.

He said activity levels are increasing and that oil and gas companies are bundling contracts into segments and markets, where bigger players have a better chance to compete if they are more diversified.

“We’re also encouraged that they’re limiting it to legitimate players within the Malaysian waters. No agents and brokers inside it that leaks yield from it. It creates a better environment for the whole ecosystem to operate against. Those are great signs for us.

“We are encouraged by the tender levels and we hope to be able to secure more (contracts) by the fact that we’ve been commercially competitive and we’re positioned well to win more,” said Amir.

As at March 31, 2017 Icon’s order book stood at RM510 million, which will spread over the next four years.

He said while Malaysia remains its core market, it will continue to work on its Brunei business to get more jobs there.