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Africa Economic Institute

Egyptian Oil Service Expands to Russia and India

The next four months , Maridive & Oil Services SAE and Velentine Maritime are going to join forces and build pipelines in India and Russia. Maridive & Oil Services SAE, an Egyptian marine and oil support service company, said its units Valentine Maritime and Maridive Offshore Projects may sign contracts…

Maridive has contract with Nigeria, also offers services to Malaysia and indonesia, said Issa Eleish, Chairman of the company in a interview June 30.  “The outlook is very positive,” Eleish said. “We increased our efforts, increased our units, took more work and we are trying to tighten our belt.”

The company may consider offering shares of Maridive Offshore Projects on the Egyptian Exchange when oil prices stabilize between $75 and $80 a barrel, Eleish said. He expects oil prices to reach that range by the end of this year. Crude for August delivery traded at $68.23 in electronic trading on the new York Mercantile Exchange today.

Revenue from new vessels and contracts as well as cost cuts are expected to help the company offset the impact of the global financial crisis, Eleish said. Full-year profit is expected to be around $100 million, little changed from last year.

Maridive generates more than 80 percent of its revenue outside Egypt, offering offshore construction services and support vessels, investment bank HC Securities & investment said in a note today, resuming its coverage of the company with a “buy” recommendation. Maridive shares, up 2 percent at 2:07 p.m. in Cairo trading, have gained 42 percent this year as oil prices rebounded 52 percent.

The worst global financial crisis since World War II has triggered a decline in charter rent rates especially in Egypt, though the bulk of Maridive’s operations in the Persian Gulf “were not greatly affected,” Eleish said.

The company added eight vessels to its fleet since its initial public offering on the Egyptian Exchange in May last year. “In 15 days we will receive another one, and in another month we will receive another one,” Eleish said, putting the number of vessels Maridive operates at around 70.

C Brokerage resumed coverage of Egypt’s Maridive & Oil Services (MOIL.CA) with a “buy” rating, saying that it expected strong growth for the company until 2011.
The company has secured contracts worth around $640 million until 2011, the brokerage said, adding that it expects both sales revenue and EBITDA to grow at a 28 percent compound annual growth rate.

“Maridive is bound to benefit from growing spending on offshore oil and gas exploration and production as onshore reserves are depleted, as well as low global vessels/rig ratio,” HC said in a note to clients.

The brokerage estimates 2009 earnings for Maridive at 35 cents per share, and set a price target of $5.21 on the company’s stock.

HC added that it expects Maridive to see a peak EBITDA margin of 46.5 percent in 2009, given greater higher-margin revenue in the company’s offshore construction services (OCS) segment.

Shares of the Egyptian oil services company closed at $3.99 Thursday in Cairo.