SEAMEC: Docked vessels may take a toll on Seamec topline - 12th December 2007

SEAMEC, which provides offshore support to petroleum exploration and production companies, is likely to see a dip in its performance during the December 2007 quarter. The Rs 200-crore company has been unable to deploy two of its vessels during the current quarter, leading to substantial loss of revenue. The vessels, which are currently in shipyards undergoing repairs and upgradation work, have faced delays in work completion.

Seamec currently owns and operates three multisupport vessels (MSVs) required in the offshore petroleum production industry and had acquired a fourth vessel in mid-2006 to ramp up its fleet. The charter rates for MSVs have moved up substantially over the past couple of years, in line with the industry trends, to around $50,000 per day currently.
Seamec’s fourth vessel, Seamec Princess, scheduled to commence business by June 2007, has already spent six extra months in shipyard for upgradation and is still to commence business. One of its working MSVs — Seamec II — while undergoing periodic dry-docking in September 2007, suffered an accident, thus putting it out of business for the entire quarter.
With both these vessels spending their time in the docks, the company could operate only two of its vessels during the current quarter. The company, which follows December year-end, is likely to report a fall in its quarterly revenue on a y-o-y basis. Since the company is also likely to book the dry-docking expenses in the current quarter itself, its profitability also would take a hit. However, the future does appear bright for the company, which expects to engage all four of its MSVs throughout 2008 resulting in higher revenues and improved profits. During the past one year, Seamec’s shares have moved up from Rs 155 level to cross Rs 255 in July 2007. However, the scrip has witnessed a decline since then. It has remained range-bound around Rs 200-220. The company, which appears to tread cautiously with regard to investing in the business despite the booming offshore industry, commands the lowest P/E among its peers.