The company announcement issued by Medserv plc yesterday strongly indicates an upturn in the oil and gas market in the Mediterranean following the market disruption caused by the war in North Africa. Although the company reported a loss in 2012 due to significantly lower business levels as the Group’s main market, Libya, was still in the process of recovery, 62% of the total revenue reported was generated in the second half of the year clearly indicating an upturn in business.
The Company also reported registering profit in the first quarter of 2013 due to the increased business in the Malta operation.
The Company took advantage of the lower business levels in 2012 and concentrated its efforts on tightening its operation and identifying new business streams. The Group embarked on capital investment, to improve efficiency and competitive levels and strengthened their management team to introduce new know-how in order to be able to meet expected business opportunities. This contributed to an increase in costs for the year with a direct consequence on the operating results for year 2012. “The downturn in business provided us with an opportunity to strengthen our service offering. The investment we made does have a short term impact on the performance reported, an impact however that will be replaced by a long term benefit to the Group.” Said Mr Diacono, Chairman at Medserv plc.
As part of the Group continued efforts to diversify both product and market, a new Maintenance Unit was established during the year and this successfully negotiated and completed its first contract with a leading International Oil Company (IOC). The Company also reported that similar contract of work has already been awarded to the Group in the first quarter of year 2013.
Medserv Misurata FZC has resumed operations in Libya as reported earlier this year. A reduced workforce is retained to oversee the current business, mainly rental, but the damaged warehouse still has not been repaired by the local authorities and this severely restricts the nature of the goods the company can store safely.
The development of the Medserv base in Limassol, Cyprus has just commenced and the Group expects to secure its first business at the end of 2013 or in the beginning of 2014 in line with progress made in exploration activity offshore Cyprus.
Despite the lifting of the offshore exploration ban by the Italian Government, no major developments were registered in Sicily during 2012. Regional issues have delayed progress. The Group is still maintaining its presence in Sicily.
In line with the Group’s effort to diversify geographically, the Group tendered for business in East Africa. For this purpose the Group entered into a joint venture with a leading European firm to strengthen its bid to penetrate this market. The tender is expected to be awarded to the successful bidder in the first half of 2013. Whilst this is the Group’s first effort in East Africa, the opportunity to participate has in fact introduced the Group to new business opportunities in a new market. A new subsidiary, Medserv East Africa Limited, has been set up with the specific task to develop these.
Of significant importance is the signing of a new lease agreement with Malta Freeport Corporation Limited on 5 December 2012 that will allow the Group to operate from its current location at Malta Freeport up to 2060. This development allows the Group to plan long term and offer to its customers the certainty that the Malta base will be available to service the major upcoming projects in the Mediterranean.
The Group also announced that they shall be investing €4 million to install a 2MWp photovoltaic farm making use of the extensive roofs found in its Malta base. This investment not only generates income for the next 20 years but is also considered as an investment towards sustainable energy production. The project should be completed and commissioned by the end of 2014.
“Whilst production levels of oil and gas from existing fields in Libya have now reached pre-war levels, the expected recovery in exploration operations has taken longer than anticipated.” said Mr Diacono. “The investment made by the Company during the year in new markets and new products bodes well for the future. The oil and gas industry is still experiencing growth globally and in particular in the Mediterranean. It is a market that is accustomed to operating in difficult situations.” he adds. “The Group is confident that it has positioned itself both at strategic and operational levels to meet the coming challenges successfully.”
The Group reports that Offshore drilling operations by Mediterranean rim countries are expected to commence in the third quarter and fourth quarter of year 2013. Medserv is well placed to act as logistics service provider for these upcoming operations.