The fate of Swiber Holdings may now be hanging precariously in the balance, but the home-grown company was once a darling in the offshore and marine industry.
Swiber, founded in 1996, started out as a small firm focusing on chartering vessels and installing oil platforms on offshore oil and gas fields.
The group listed on the Singapore Exchange's mainboard in 2006 with an initial public offering price of 57 cents per share, and the listing was strongly received.
It later made its move into the engineering, procurement, installation and construction (Epic) market, which meant it was also designing and building those oil platforms, instead of just installing them.
The shift for Swiber came amid an oil price boom, which lifted demand - and profits - for offshore oil and gas activity.
Swiber's fall has more to do with it being over-leveraged and holding on to that position as the oil market fell.
The shift to becoming an Epic contractor might have been a move to 'value-add' the business, but it also meant a lot of execution risks.
MAYBANK KIM ENG ANALYST YEAK CHEE KEONG
Such Epic projects are typically worth hundreds of millions of dollars compared with the installation jobs, which go up to, at most, tens of millions, noted IHS principal researcher Ang Ding Li.
"The Epic market is made up of much larger contracts with longer lead times and higher working capital. Contractors in this space usually need to have strong financial backing to tide them through an entire project," he said.
The company grew from strength to strength. On Oct 27, 2007, Swiber's shares hit an all-time high of $6.16. It was featured in Forbes Asia's "Best under a Billion" list in the following year for being among the top 200 Asia-Pacific firms with consistent growth in sales and profits over three years.
At the same time, the group was steadily building up its track record, which included Epic projects for British Gas India as well as Oil and Natural Gas Corporation.
But all of this quickly came undone when oil prices collapsed in June 2014. Oil majors slashed spending and halted exploration and production projects, inevitably hurting offshore providers down the chain.
Mr Ang said: "When the market was good, it made a small contract seem like a very big one. Smaller players understandably were excited to see their order books increase by so much, so a lot of them tried to expand very aggressively in the last five years by investing in new assets and new capacity. However, with oil prices down now, these new assets, even the older ones, have no work. But they still have to be paid for."
It did not help that Swiber seemed to be going for something bigger than it could handle. The firm outsourced the engineering aspect of an Epic project - which usually makes up more than 80 per cent of its cost - to other contractors, as it did not have those capabilities, said an industry analyst, who declined to be named. Its competitors, on the other hand, included big boys such as McDermott International and Saipem.
When Swiber announced in February last year that it had bagged a US$310 million (S$417 million) contract from a national oil company in South Asia - its second-largest win - Maybank Kim Eng analyst Yeak Chee Keong was unimpressed, noting that Swiber had won by "bidding aggressively". "We are not positive," he said in a report then. "We believe Swiber is eager to end its order drought decisively in a weak environment. It could be looking to just cover cash costs."
Swiber posted a net loss of US$27.4 million for the 2015 fiscal year, its first since listing, and by then had chalked up high debt levels. Its shares last traded on July 27 at 10.9 cents, before trading was halted. The company has close to 2,700 employees worldwide, with around 1,000 in Singapore.
Mr Yeak told The Sunday Times: "Swiber's fall has more to do with it being over-leveraged and holding on to that position as the oil market fell. The shift to becoming an Epic contractor might have been a move to 'value-add' the business, but it also meant a lot of execution risks."
Swiber's fall could be just the tip of the iceberg for the hard-hit offshore sector. After all, the market consensus is that oil prices will remain, for some time, at levels below the necessary break-even rates for most offshore projects, noted Mr Mick Aw, senior partner at shipping advisory firm Moore Stephens.
"Demand is in a horrendous pit," he said. "Money is short for most companies and this has created a vicious circle. Firms are in a loss-making position; they cannot raise money to support their operations, so they lose contracts which makes them lose more money and forces them into a downward spiral."