Ezion Q3 net profit falls 42% as oil majors cut spending

Ezion said that with crude prices staying weak, oil majors are expected to continue to reduce capital expenditure on exploration and development.
Ezion said that with crude prices staying weak, oil majors are expected to continue to reduce capital expenditure on exploration and development.PHOTO: EZION HOLDINGS

SINGAPORE - Ezion Holdings, which provides support services to the oil & gas industry, reported on Thursday (Nov 12) a 42.3 per cent fall in net profit to US$25.8 million (S$36.6 million) for its third quarter ended Sept 30, from US$44.8 million a year ago.

Group revenue for the quarter fell 9.1 per cent to US$86.2 million, due mainly to the absence of contribution from the marine and offshore logistic support services division as projects in Queensland, Australia did not go into additional trains as originally planned.

Profit was also hurt by the higher cost of sales and servicing for the quarter, which increased by 31.8 per cent to US$61.3 million from a year ago, due to the deployment of additional service rigs.

On the company's outlook, Ezion said that with crude prices staying weak, oil majors are expected to continue to reduce capital expenditure on exploration and development.

While the focus will be on extraction and production related activities, the lower fuel prices have prompted tightening of related operating expenditure and the increase in demand for higher standard of equipment and services from clients, it added.

"The group is doing its best to meet these requirements through switching the units among its clients and through strategic modifications and upgrades," it said.

Ezion also said it will explore merger and acquisitions and strategic tie-ups to enhance returns from its existing assets.

No dividend was declared for the quarter.