Despite the offshore and marine (O& M) industry hitting rock bottom during Covid-19, Paul Whiley, COO and executive director of Mermaid Maritime DU4 0.00% , has remained optimistic.

 

&ldquo This wasn&rsquo t the first time that the world had seen a crisis in oil prices and you learn from the past. Look at what happened at the end of the 80s and what happened at the turn of the 90s. When you get pressure like this, what goes up must come down eventually,&rdquo says Whiley.

 

Between 1QFY2021 ended March 2021 and 1QFY2022, Mermaid slumped to a net loss of US$4.1 million ($5.4 million) and US$8.0 million respectively, as its divers and vessels saw limited activity due to Covid-19 health restrictions.

 

Mermaid&rsquo s divers do most of the heavy lifting across its four business segments.

 

These include subsea inspections, repair and maintenance (IRM) work, cable-laying projects, transportation and installation (T& I), and decommissioning projects.

 

Whiley says: &ldquo We&rsquo re the biggest company in the world because we&rsquo ve got around 1,000 divers working for us. Most of them are for air diving, while a smaller number are for satu- ration diving.&rdquo

 

Air diving, where the diver carries the tra- ditional tank with a gas mix of nitrogen and oxygen, allows diving of up to between 30m and 40m, while divers can dive to a depth of up to 200m with saturation, which uses a gas mix of helium and oxygen.

 

&ldquo Helium is four times thinner than nitrogen. It is also just an inert gas that carries oxygen. It perfuses quickly in the blood, carries oxygen more efficiently and, most importantly, there are no toxic effects,&rdquo explains Whiley.

 

Diving is essential in the IRM space and 70% of the company&rsquo s workforce is involved in the segment, says Whiley.

 

He says: &ldquo There&rsquo s also quite a lot of diving involved in the maintenance of single-point moorings (SPMs) for ships.&rdquo

 

In 1QFY2021, Mermaid&rsquo s total subsea IRM works made up US$17.9 million, or 95.7% of total revenue of US$18.7 million. Three years later, in its latest 1QFY2024, total subsea IRM revenue stood at US$46 million, or 52.3% of the period&rsquo s US$88 million total.

 

&ldquo But we also do a lot of new installations and commissioning, we install new fields (oil platforms), subsea pipelines and cables,&rdquo adds Whiley.

 

Subsea vessels, decommissioning

 

The laying of subsea cables is a newer segment of Mermaid, which has been in business for more than 40 years.

 

The company recorded its first revenue of US$800,000 in 1QFY2021.

 

In 1QFY2024, revenue from the segment had grown to US$12.1 million, driven by recent projects off the southwestern coast of Africa.

 

Another recent business Mermaid started is the removal of offshore oil and gas structures &mdash a process known as decommissioning.

 

In 1QFY2022, the T& I and decommissioning segment reported its first revenue of US$10.1 million or 25% of the total US$40.4 million revenue.

 

Whiley sees decommissioning as a &ldquo sunrise business&rdquo that Mermaid can benefit from over the next 30 to 40 years. In 1QFY2024, due to the commencement of operations on a project in the Gulf of Thailand, revenue in the segment increased more than fourfold to US$29.9 million, or 34% of total revenue.

 

Overall, Whiley describes Mermaid&rsquo s present positioning along the O& M value chain as one of the company&rsquo s key strengths.

 

He says: &ldquo We are not at the top of the value chain and we are not an EPC (engineering, procurement, construction) company. We don&rsquo t want to be that. We want to be at that next level where we work for big oil and gas or national oil companies. But we also fancy being a contractor&rsquo s contractor.&rdquo

 

Alongside its force of divers, the compa- ny also owns a fleet of eight subsea support vessels.

 

As at Dec 31, 2023, there are five specialised dive support vessels (DSV), one specialised cable-laying vessel for shallow waters, as well as 13 remotely operated vehicle (ROV) systems.

 

While a larger fleet would allow Mermaid to undertake projects globally, interested parties bid on potential projects with owned assets, says Whiley, after which more assets are purchased or rented to complete the job.

 

Mermaid also uses short-term and long-term chartered-in vessels in its operations.

 

The DSV Van Gogh is one example. Working in the Gulf of Thailand since early 2022, the DSV will remain at the project site until October 2026.

 

Whiley explains that chartering a vessel for such a long duration is usual but the Van Gogh, built in 2019, is a vessel specially designed for the job.

 

&ldquo The Van Gogh is one of the newest DSVs in the world, and it is big, powerful and ex- pensive.&rdquo Although Mermaid boasts a strong work-force and an impressive fleet, the company&rsquo s true strength lies in identifying new business opportunities.

 

In 1QFY2024, Mermaid&rsquo s order book stood at US$735 million, more than double the US$320 million in 1QFY2023. This was led by multiple projects in Southeast Asia, the Middle East, the North Sea and the Western sub-Saharan region that should last until FY2026.

 

Notably, US$463 million will come from the T& I and decommissioning while US$96 million will come from the cable-laying businesses, compared to US$63 million and US$25 million respectively in the 1QFY2023 order book.

 

Mermaid&rsquo s prospects have led Lim & Tan Securities&rsquo analyst Nicholas Yon to initiate a &ldquo buy&rdquo on the company with a target price of 30 cents.

 

In his July 3 report, Yon writes: &ldquo Mermaid Maritime boasts one of the world&rsquo s largest DSV fleets and is a turnaround company strategically positioned to capitalise on the rising demand for decommissioning and IRM projects amidst higher oil prices and global sustainability initiatives.&rdquo

 

&ldquo We expect Mermaid&rsquo s win momentum to continue and the order book to cross $1 bil- lion, giving further visibility beyond FY2024,&rdquo he adds.

 

&ldquo There are 40 years of history, so the company&rsquo s got quite a lot of reasons to be cheerful. Not a lot of companies in a similar space can last 40 years. In this business, they say seven years is a lifetime,&rdquo says Whiley.