Saudi shipper Bahri targets acquisitions in Asia, Middle East

Saudi Arabia's Bahri, the world's largest owner of very large crude carriers, is seeking acquisitions in Asia and the Middle East. (Reuters)
Updated 07 November 2018

Saudi shipper Bahri targets acquisitions in Asia, Middle East

  • Bahri is world's biggest owner of VLCCs
  • Targets listed firm in Asia

RIYADH: Saudi Arabia’s Bahri is targeting acquisitions in Asia and the Middle East as the exclusive oil shipper for state energy giant Saudi Aramco seeks to expand its reach, the chief executive said on Wednesday.
Bahri is the world’s largest owner and operator of very large crude carriers (VLCCs). Saudi sovereign wealth fund the Public Investment Fund (PIF) owns 22 percent of the company and Aramco has a 20 percent stake.
“We are looking at multiple acquisitions in the Middle East and Asia worth tens of millions of dollars,” Bahri CEO Abdullah Aldubaikhi told Reuters.
“We want to tap into a new area related to the maritime sector by acquiring companies offering services that are not currently available within Bahri’s portfolio,” he said, without specifying what services would be added.
The company aimed to buy a listed firm in Asia in a deal that would probably be completed in the third quarter of 2019, he said, without elaborating.
Bahri transports Saudi Aramco’s VLCC cargoes on a cost, insurance and freight (CIF) basis, making it the world’s busiest oil shipper.
It transports crude oil, chemicals and dry bulk. It also offers ship management services. In 2014 it merged with the former shipping arm of Aramco, Vela Marine International.
Acquisitions in the pipeline will be financed from the company’s own funds and banking finance, Aldubaikhi said.
The company, which has 45 VLCCs, plans to add 15 more to its fleet through a $1.5 billion investment fund it launched in 2017 with Arab Petroleum Investments Corp. (APICORP).
The APICORP Bahri Oil Shipping Fund (ABOSF) will raise $1.5 billion in three stages raising $500 million each time. APICORP will contribute 85 percent of the funds and Bahri the rest.
The first $500 million phase would be raised in the first quarter of 2019 and the second tranche would probably be completed in the second quarter of 2020, Aldubaikhi said.
Bahri reported a 34.4 percent increase in third quarter net profit to SR81.3 million ($22.7 million) after zakat and tax, versus SR60.5 million a year earlier.
“We are expanding and growing, and although the shipping industry is cyclical, I think it has bottomed out in 2018,” Aldubaikhi said. “The cycle of the shipping industry in 2019 will improve, and the years 2020 and 2021 will be the golden years for this industry.”


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.