Maritime firm Viking Offshore and Marine is muscling its way into the rig business in a bid to tap growing demand in the energy sector.
The firm told a briefing on Monday that it will partner veteran rig-builder Chan Kwan Bian, a co-founder of Labroy Marine, to construct a drilling jack-up rig at a cost of about US$180 million (S$223 million).
A new Viking subsidiary, Viking Asset Management, will pay US$5.4 million to acquire a 30 per cent stake in Smart Earl Investment (SEI), an investment vehicle that belongs to Mr Chan.
SEI has the rights to construct the jack-up rig, which is designed for use at a water depth of up to 114m. It is expected to be completed within 26 months and then either sold or chartered to customers in South-east Asia.
Viking provides services to the offshore and marine industry, including solutions for ventilation.
Chairman and executive director Andy Lim said the deal is a strategic move up the value chain, adding that the demand for rigs far outstrips the supply.
Viking's foray into rig building may be the first of more to come.
"If you look at those listed on Norway's stock exchange, their equivalent of the Catalist, I think Northern Offshore, with six to eight rigs... that would be a good benchmark," said Mr Lim.
Separately, another co-founder of Labroy Marine, Mr Tan Boy Tee, is buying 40 million new Viking shares worth $3.2 million.
The issue price of eight cents per subscription share represents a discount of about 1.2 per cent to the volume weighted average price of 8.1 cents for trades done last Friday.
Mr Tan also has the option of subscribing for another 40 million new shares at $3.2 million. If he exercises that option, his stake will represent 10.1 per cent of the enlarged issued and paid-up share capital of the firm.
Labroy Marine had been listed on the Singapore Exchange but was sold to Dubai Drydocks World for $2.4 billion in 2008.
Viking on Monday said third-quarter net profit from continuing operations rose 15 per cent from the same period last year, to $227,000. Revenue for the three months to Sept 30 was up 9 per cent to $15.4 million due mainly to a better order backlog.
Earnings per share came in at 0.03 cent, down from a restated 0.06 cent a year earlier, while net asset value per share was 12 cents as at Sept 30, down from 13 cents as at Dec 31.
Viking requested a trading halt before markets opened on Monday, pending the announcement. Its shares resumed trading.
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