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Aban Offshore Ltd.

BSE: 523204 Sector: Oil & Gas
NSE: ABAN ISIN Code: INE421A01028
BSE 00:00 | 19 Oct 23.10 0.10
(0.43%)
OPEN

23.10

HIGH

23.50

LOW

22.50

NSE 00:00 | 19 Oct 23.00 0
(0.00%)
OPEN

23.55

HIGH

23.70

LOW

22.90

OPEN 23.10
PREVIOUS CLOSE 23.00
VOLUME 9340
52-Week high 34.90
52-Week low 12.60
P/E
Mkt Cap.(Rs cr) 135
Buy Price 22.90
Buy Qty 220.00
Sell Price 23.10
Sell Qty 5.00
OPEN 23.10
CLOSE 23.00
VOLUME 9340
52-Week high 34.90
52-Week low 12.60
P/E
Mkt Cap.(Rs cr) 135
Buy Price 22.90
Buy Qty 220.00
Sell Price 23.10
Sell Qty 5.00

Aban Offshore Ltd. (ABAN) - Chairman Speech

Company chairman speech

I Present The Performance Of The Company For The Year Under Review: Revenues DeclinedBy 42.17 Per Cent And Profit After Tax Declined By 10.58 Per Cent.

I Must Assure Our Shareholders That Even As These Numbers Seem Adverse At First GlanceThey Are Better Than The Sectoral Average And Stand Testimony To Our Passion To Perform InThe Face Of Challenges.

Overview

The global oil sector reflected a divergent trend during the course of the year underreview. During the first half of the financial year the international price of crude oilstrengthened from a starting-of-the-year figure of $ 66 per barrel to a peak of $ 74 perbarrel. While oil realisations were strengthening oil-prospecting companies were moreinterested in engaging in fresh drilling and strengthening their multi-year reserves.

Thereafter the prospects of a global over-supply began to surface and oil pricesdeclined to a 2018-19 low of $ 46 per barrel before recovering to close the financial yearat $ 63 per barrel.

Seldom in the space of any one financial year have we seen three distinct short-termprice moves enhancing sectoral uncertainty and volatility. In the downstream oilmarketing sector one of the pre-requisites for funding additional capital expenditure isstability or optimistic outlook both of which were absent during the last financial year.

This reality affected the sentiment for fresh drilling and prospecting which in turnaffected rig deployment and utilisation on the one hand and rig-day rates on the other.The result is that the entire oil sector eco-system encountered challenging circumstanceswhere the biggest challenge was to weather the prevailing environment with a minimalimpact on competitiveness.

At Aban we believe that the most effective strategy for the moment is to beopportunity-ready. While there is no certainty when the sectoral sentiment may turn forthe better there is a premium on the ability to be fully prepared at all times.

Aban’s positioning

At Aban we believe that the most prudent strategy in this challenging environment ismastering the defensive: controlling costs enhancing . We asset availability andamortising fixed costs more effectively believe that in an environment where the prospectof an improvement in rig rates is negligible for the moment the best strategy is to lookwithin remove inefficiencies moderate costs and enhance overall competitiveness.

During the year under review the Company continued to focus on deploying most of itsassets across the foreseeable future with the objective of reducing idling generatingrevenues covering focused costs more effectively and enhancing overall viability.

The effectiveness of our focus became visible as we bagged contracts for rigs Aban IIIand IV from Oil and Natural Gas Corporation (ONGC) India’s largest hydrocarbonexploration company. These rigs will be deployed for a period of three years starting fromthe third quarter of the current financial year enhancing our revenue visibility fromthese assets.

Besides this focus on enhancing revenue visibility was also reflected in thedeployment of Deep Driller 8 (Aban Singapore) for two years starting October 2018. Sincethe rig has already been put on stream for the client the revenue inflows have commenced.

Aban 8 was deployed for Petrofac a prominent oil major of Malaysia. The contract forthree firm wells and two optional wells was extended to the first quarter of 2019-20.

I am pleased to report that Deep Driller 4 was operating for Vedanta Limited untilApril 2018 following which it was enlisted for refurbishment. The Company entered into acontract with Carigalli PTTEP Operating Company (CPOC) for deployment for 18 monthsstarting May 2019 with the possibility of time-based extensions.

Opportunity-ready

At Aban we believe that the most effective strategy for the moment is to beopportunity-ready. While there is no certainty when the sectoral sentiment may turn forthe better there is a premium on the ability to be fully prepared at all times.

At our company we believe that opportunity-readiness will be derived from ouroperating assets being maintained through the downtrend so that they are deployment-readywhenever needed. We also believe that we need to protect our most precious capitalknowledge through strengthening people-retention during these challenging timesreinforced through a culture of training and continuous skilling. We have faith that byinvesting in safety practices we will strengthen our recall as a preferred serviceprovider by companies at a time when every day of drilling is critical to customerprofitability. We are convinced that companies that survive through this downturn and arethe last standing will be the first off the blocks when sectoral conditions revive.

Guarded optimism

While it would be too early to ascertain which way the oil market is headed theoptimism comes from the fact that oil prices rebounded and steadied in the high sixtieslevel. The Company is seeing an incidence where more enquiries are being converted intocontracts. While rig rentals are steady at $ 50-70 per barrel compared to peak levels thatwere considerably higher the objective is to maximise rig deployment at these rates. Webelieve an excess of rig scrapping during this downtrend over rig introduction will steadythe market across the foreseeable future. A tipping point could then result in a largerdemand for rigs than available supply strengthening realisations. As one of the largerglobal rig owning companies with a wide portfolio and relatively young assets we believewe are attractively placed to capitalise on the next upturn.

Our priorities

At Aban our priority is to optimise the capacity utilisation of our assets on the onehand and reduce debt or service interest payments on the other. We believe that acombination of the two will reduce the size of our Balance Sheet strengthen ourany-market competitiveness and reinforce business sustainability.

Reji Abraham

Managing Director

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