Mermaid Marine H1 profit up to $12.3m

Oil and gas services company Mermaid Marine Australia has reported a 63 per cent lift in its interim net profit on the back of higher margins from its international business.

The company achieved a net profit of $12.3 million, up from the previous corresponding period's $7.5 million.

"The Company's supply bases, slipway, Australian-based vessels and international vessels all performed well and made a material contribution to the result," Mermaid said.

Total revenue for the period was up 26 per cent to $78.9 million as a result of strong demand experienced in the first quarter, which is typically a seasonally weaker period.

On a division by division basis, earnings before interest and tax for vessels was up 47 per cent to $17.4 million.

EBIT for the supply bases division was up 48 per cent to $4.6 million.

The directors have declared a fully franked dividend of two cents per share.

Part of the company's report is below:

Review of Operations

The solid financial performance in the first half of FY2009 highlights the value of the diversity in earnings across the organisation. The Company's supply bases, slipway, Australian-based vessels and international vessels all performed well and made a material contribution to the result.

Strong demand was experienced during the first quarter, which is typically a seasonally weaker quarter, allowing the business to report revenue growth of 26% to $78.9 million for the half year.

The higher margins achieved by our international business contributed to a 63% increase in net profit to $12.2 million.

Earnings per share also improved by 31% to 6.7 cents, up from 5.1 cents in the first half of FY08.

The Board has approved a fully franked interim dividend of 2 cents per share.

Vessel Operations

Vessel revenue increased by 22% compared to the previous corresponding period and EBIT contribution increased by 47% to $17.4 million.

Firm demand was evident for our vessels in the first half supporting the ENI Blacktip project in the Bonaparte Basin, the Apache Van Gogh FPSO development in the Carnarvon Basin and normal production support activities in the North West Shelf. During the second half our vessels will be involved in the commencement of construction of Woodside's Pluto pipeline and ongoing work on the Van Gogh FPSO development.

MMA currently has four vessels trading internationally. The Mermaid Discovery is continuing operations out of Egypt in the Mediterranean and Red Seas. The Crest Diamond, Miclyn Glory and Swissco Sovereign sailed to Angola in September and on current expectations will stay in the region for the majority of the 2009 calendar year.

The international business has made a solid contribution to earnings during the half. Our client, Geokinetics, produces high quality seismic data for its clients and has been successful in generating additional work in the regions.

MMA took delivery of the new vessel Mermaid Searcher late in the first half and this vessel will commence its first longer term charter in February, supporting the Pluto pipeline construction.

MMA continues to review opportunities for new vessels, particularly in the longer term contract market.

Supply Bases

MMA's supply base operations in Dampier and Broome continue to grow in significance for the Company as we commit to new infrastructure, attract new clients and increase earnings.

Dampier supply base revenue grew to $16.7 million, a 49% increase on the previous corresponding period, with EBIT increasing by 48% to $4.6 million. In November 2008, MMA announced that it had signed a contract with Chevron Australia Pty Ltd to provide supply base services supporting the Gorgon Project. This was an enormous step forward for the Company and we are now in the process of undertaking the necessary upgrades to our common user facility to meet the requirements of the project. Work has already commenced on construction of an extension to the current barge loading ramp, with other work expected to commence shortly. This is an excitingproject for MMA that will add value for our shareholders in the short and longer term.

MMA completed the last concrete pour on the $22 million Dampier wharf extension on 10 February, 2009. This means that the extension will be completed well ahead of our original schedule of May 2009 and will be completed under budget. This wharf development places MMA in a unique position to take advantage of the ongoing development in oil and gas projects in the North West Shelf region.

Broome supply base has also performed ahead of budget in the first half with drilling in the highly prospective Browse Basin remaining active. Work has continued on developing a new supply base facility on Port Drive and a world class casing yard has been completed.

Additional infrastructure will be constructed over the next year as demand requires. MMA operates in joint venture with Toll in Broome and we are well positioned to take advantages of future developments in the Browse Basin region.

The MMA slipway also had a strong first half undertaking work on MMA vessels and third-party vessels. The slipway now undertakes blasting and painting services directly - a positive development both in terms of quality and margins. The slipway has a strong order book for the second half of the financial year.

Outlook

MMA is not immune to the impact of the Global Financial Crisis but is arguably exposed to a sector of the market that will continue to invest through the downturn. LNG is acknowledged as a commodity with an excellent long term future and there has been a strong commitment from the major oil companies to ongoing capital expenditure for key LNG Projects. Woodside is currently constructing its Pluto LNG project and Chevron with its JV partners Shell and Exxon Mobil, continues to make progress towards a Financial Investment Decision on the Gorgon project.

With the new wharf extension being completed, work commencing on the Dampier supply base upgrade, our new vessel, Mermaid Searcher, starting to contribute and offshore work commencing on the Woodside Pluto project, the Company has good cause for optimism going forward.