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SembCorp Marine to ride out the storm?

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It had been a harrowing ride for SembCorp Marine as the world number 2 oil rig builder faces crisis after crisis in the aftermath of the global oil slump. The past few years had seen Sembcorp making an explosive impairment amounting to $609 million in FY2015, engaged in a bitter legal battle against Marco Polo Marine and embroiled in the intriguing possible link to Sete Brasil corruption scandal.

However, in early 2018, United States President Donald Trump had proposed an aggressive plan to transform the country into a superpower energy nation. Against the backdrop of improving oil price, can SembCorp Marine ride out this vicious storm?

The four key capabilities of SembCorp Marine are Rigs & Floaters, Repairs & Upgrades, Offshore Platforms and Specialized Shipbuilding. The businesses of SembCorp Marine are all in direct competition against fellow peer, Keppel Corporation.

But unlike Keppel, SembCorp Marine is a pure offshore and marine company and therefore don’t have the buffer from other business segments to withstand the impact from the downturn in the oil and gas sector. In this regard, the financial destiny of SembCorp Marine is perceived to be more impacted by the oil slump than Keppel Corp. To find out more about my analysis of the parent company, SembCorp Industries, do sign up as member to access the protected article.

SembCorp Marine

Demand for Oil Rigs

In the oil industry, the Baker Hughes Rig Counts is an important indicator that reflects the demand for products used in oil drilling. According to the data from Baker Hughes, the number of new rigs [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: June 12, 2018 — 2:32 am

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