Seatrium Shares Add 16% in July As Order Book Builds

Seatrium shares (SGX: 5E2) have quietly gone about reversing a bearish trend in the month of July, adding 16% and looking to break out of the recent range. What could be playing a role in the turnaround?

In a significant boost to its business prospects, the firm had in recent months announced it had won orders worth $11 billion from Petrobras, Brazil's state-controlled oil giant, to construct two Floating Production Storage and Offloading (FPSO) units. The projects, which involve building the P-84 and P-85 FPSOs, are monumental not only in scale but also as they substantially enrich Seatrium's total order book.

The P-84 and P-85 FPSOs are expected to have a towering production capacity of 225,000 barrels of oil per day (bopd) and a gas processing capacity of 10 million cubic meters per day. These vessels are central to the push for advancing offshore oil processing, embodying a trend towards larger and more complex maritime energy infrastructure.

Scheduled to commence construction in the first quarter of the next year, the completion of both units is targeted for 2029. This timeline suggests a long-term engagement that will necessitate sustained effort and strategic planning from Seatrium's end.

Boosting its total order book to a formidable $16.2 billion, Seatrium is poised to reinforce its position in the global FPSO market. This order book expansion provides a substantial backlog that could safeguard the company's revenue stream in the medium to long term.

Further detailing their plans, Seatrium has set out to manufacture modules for the FPSOs across its facilities situated in Brazil, China, and Singapore, with the plan for final integration taking place in Singapore before the units are deployed to Brazil. This global manufacturing strategy may offer Seatrium logistical and cost advantages, given the diverse locations' differing labor costs and technical capabilities.

These recent contracts build upon an existing relationship between Seatrium and Petrobras, with Seatrium currently executing contracts for four other FPSOs for Petrobras—named P-78, P-80, P-82, and P-83. The continuity of work with Petrobras can be seen as a sign of trust and reliability in Seatrium’s workmanship and project management expertise.

Seatrium's CEO, Chris Ong, has expressed his gratitude for being selected by Petrobras for the construction of the P-84 and P-85 and views these projects as transformative for the company. The CEO's statement reflects the significance attributed to these contracts and the potential they hold for accelerating Seatrium's growth trajectory.

These contracts are pivotal for Seatrium as they not only represent considerable revenue but also signal competence and competitiveness in the FPSO sector. With several ambitious projects on the horizon, Seatrium appears well-positioned to solidify its reputation in the industry and possibly expand its market share in the oil and gas services sector.