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Mermaid exited over recent strategic partnership with Malaysian firm to strengthen its offshore drilling business

Back Sep 25, 2007

Mermaid is expanding its business in Malaysia through a strategic partnership with a subsidiary of KNPE, a prominent Malaysian rig fabrication and engineering services Company to expand its offshore drilling services in the Southeast Asian region.  

M.L. Chandchutha Chandratat, Managing Director, Thoresen Thai Agencies Public Company Limited ("TTA") said that Mermaid Maritime Public Company Limited ("MMPCL"), a subsidiary of TTA, finalised a strategic agreement to form a new Malaysia-based offshore drilling company with a wholly-owned subsidiary of Kencana Petroleum Berhad ("KNPE"). Mermaid Drilling (Singapore) Pte. Ltd. ("MDS"), a subsidiary of MMPCL, signed a shareholders agreement with Kencana Petroleum Ventures Sdn. Bhd. ("KPV") on September 19, 2007 to facilitate provision of offshore drilling and drilling-related services in Malaysia.
Kencana Mermaid Drilling Sdn. Bhd. ("KMD"), the new associate company, will enter the business of offshore drilling and drilling-related services in the oil and gas industry in Malaysia through the operation of drilling units, such as tender barges, jackups, submersibles, semi-submersibles, drilling ships, platform drilling units, and its associated machinery and equipment. 
KNPE, through its wholly-owned subsidiary Kencana HL Sdn Bhd, is one of seven offshore major fabrication licence holders issued by Petroliam Nasional Berhad ("Petronas"). The KNPE group of companies has become one of the fastest growing integrated engineering and fabrication solutions providers for oil and gas companies in Malaysia.

KNPE's successful track record, spanning twenty-five (25) years and several hundred projects, makes them highly regarded both locally and internationally, given its ability to deliver total turnkey solutions for engineering and fabrication of complex structures in the oil and gas industry. Besides, KNPE has in-house facilities and technical skills to undertake the full range of design and engineering work that is required for the fabrication of total production facilities, modules, process skid systems, and other structures. KNPE is listed on the Malaysia Exchange, previously known as the Kuala Lumpur Stock Exchange.
KMD shareholders will consist of KPV (60%) and MDS (40%) with funds from the working capital of MMPCL. KMD will be incorporated around October 2007, with an initial authorised and paid-up capital of RM 100,000 divided into 100,000 ordinary shares of RM 1.00 each. The investment amount by MDS equals RM 40,000, or approximately Baht 404,000 using a RM/THB exchange rate of 10.1. The size of transaction equals 0.001% of total assets of TTA and its subsidiaries as of 30 June 2007.

Oil and gas industry activities are expected to grow as evidenced by the sustained high demand and high prices for hydrocarbons. As such, exploration and production activities for oil and gas are expected to continue to be robust for many years. This should augur well for KMD, as sustained exploration and production activities will robust in continued high demand for drilling and related services.