MedservRegis plc - Interim Report
On 22 May 2019, Medserv plc published an Interim Report providing an overview of the company’s performance during the first three months of 2019. In this respect, the Group explained that total revenues grew by 51% higher when compared to Q1 2018, largely driven by a surge in the business of Integrated Logistics Support Services (“ILSS”) which, in turn, amounted to €9 million compared to €4.9 million in the first three months of 2018. On the other hand, revenues generated from the business of Oil Country Tubular Goods (“OCTG”) was virtually flat registering a marginal increase in activity of 3% to €3.4 million.
In view of the significant increase in ILSS business, coupled with the considerable improvement in the EBITDA margin to almost 29% (Q1 2018: 16.9%), EBITDA climbed to €3.6 million in the first three months of 2019 compared to €1.4 million in Q1 2018.
The Interim Report also provided an update on the Group’s operations spread across the various regions as follows:
- In Malta, Medserv continues to support the offshore Libya Bahr Essalam Phase Two project. Despite the conflict in Libya, all client operations have continued without any disruption, using Medserv’s base in Malta as the shore base for these operations. Furthermore, Medserv secured various engineering work engagements from the oil majors operating in Libya.
- In Cyprus, Medserv supported ExxonMobil’s drilling campaign resulting in a significant gas discovery. The discoveries by ExxonMobil and ENI have led to an increase in exploration drilling campaigns offshore Cyprus which are scheduled to commence in Q4 2019. These positive developments have triggered additional exploration campaigns offshore Lebanon for which Medserv has been invited to participate.
- In Egypt, Medserv registered improved profitability as the company is now using its own acquired equipment rather than relying on outsourced services. In addition, Medserv has been contracted to carry out additional services in the coming months as it benefits from its first-mover advantage. In fact, other International Oil Companies (“IOCs”) are showing interest to subcontract their shore base logistics to Medserv.
- In Suriname, Medserv started offering its services to Staatsolie Maatschappij Suriname N.V. as the latter commenced its near-shore drilling programme consisting of 9 wells. In this respect, Medserv also explained that ExxonMobil’s successful oil discoveries in neighbouring Guyana have raised optimism of a major discovery in Suriname, whilst it continues pursuing further growth opportunities in the region as other IOCs plan to drill in this emerging region later this year and in the coming years.
- In the Middle East, METS Iraq is reporting operational improvements as this business unit continues to recover. On the other hand, METS Oman remains the key profit generating unit in the OCTG business.
In addition to the above, the Interim Report noted that Medserv is still awaiting for the necessary approvals for the Uganda project to proceed. This would provide the Group with another long-term contract with consistent revenues. Moreover, the company is also awaiting the adjudication of an award of additional Supply Chain Management contracts in the Middle East in 2019.
In conclusion, Medserv explained that improved market conditions, increased drilling projects and a track record of successful delivery of projects, are key in supporting the company’s growth in earnings.