Australian (ASX) Stock Market Forum

NMS - Neptune Marine Services

gee baussie - you coulda posted the article - effortlessly typed up by woywoy of HC fame - but stuff 'ím, i'll take the credit lol.

todays afr - pg35

With the oil price hovering around record levels and intense exploration and production activity in train, it is not surprising to see the share prices of companies that service the sector experiencing strong support.

One of the largest operators in the oil and gas services sector is Worley Parsons. It's share price has risen from about $29 in mid August to more than $44, an increase of about 50 per cent.

While the performance of Worley Parsons is outstanding, there are smaller players operating in niche markets that have the scope to achieve similar levels of growth in the medium term.

Neptune Marine is one such company. The business provides specialised services to operators of offshore oil and gas facilities. Its scope of services includes pipeline inspection, maintenance and repair work, an area that is likely to produce robust revenue growth due to the fact that many major pipeline facilities are overdue for repair because of their age.

Neptune's proprietary underwater welding technology, NEPSYS, can be used to construct or repair metal objects underwater. This patented technology has been used in ship repairs as well as construction and maintenance work relating to offshore oil and gas platforms and pipelines.

The NEPSYS method of welding is of the same quality as that achieved in a dry environment. Significant cost savings can be achieved using NEPSYS, as it usually avoids or minimises the need to shut down facilities and provides a more economical method of construction or repair.

While NEPSYS was the platform for Neptune's launch as a listed company in 2004, several developments in the last two years have catapulted Neptune onto the international stage as a provider of multi-disciplined marine services to oil and gas companies.

Christian Lange was appointed as managing director of Neptune in 2006 following an executive career spanning 16 years with Schlumberger, one of the worlds largest global oilfield services groups.

Mr Lange has drawn on his experience in operational strategy and his understanding of capital markets in the energy services industry to pave the way for strong growth and the establishment of diversified and reliable revenue streams. As well as one-off project, Neptune is pursuing opportunities in the inspection, repair and maintenance areas where long-term contracts generating recurring revenue can provide earnings stability. With this in mind, the company has made several acquisitions that have broadened its service offering and in particular strengthened its ability to conduct underwater inspection, repair and maintenance work.

Between December 2006 and August 2007, Neptune acquired three diving services businesses, two subsea engineering companies and one company that specialises in underwater surveying. Neptune also has the $17 million acquisition (plus a 3 year earn out agreement) of Sea-Struct awaiting settlement.

Sea-Struct is a Perth-based company that has 14 years experience in manufacturing, supplying and installing pipeline and cable stabilisation protection and erosion control products. The company services a broad range of industries that own and maintain underwater infrastructure.

The Sea-Struct acquisition is expected to be immediately earnings per share accretive. Furthermore, Mr Lange sees considerable scope to broaden Neptune's international presence through Sea-Struct's overseas affiliates and representatives. New areas that Sea-Struct's network opens up include Singapore, Indonesia and the Middle East, but Neptune's immediate focus is on growing its already strong presence in the United States, and building on its relatively new position in the Asian market.

In October, Neptune's US-based underwater services business signed an agreement with the Colorado River-Authority to provide diving services for all LCRA projects in the Texas Lakes, Neptune's other success in the water services area was an inspection, cleaning and maintenance project that it undertook on behalf of the US Army Corps.

Mr Lange believes Neptune's ability to establish a safe and efficient work record with large oil and gas-companies in the Gulf of Mexico has lifted the company's profile, enabling it to compete for large government contracts. More positive news is likely in the near term with acquisitions under review, long-term contracts up for renewal and new tenders in the pipeline.

For some time Neptune has been waiting for the right opportunity to emerge in the North Sea region. There is a significant subsea infrastructure in that area, much of which is overdue for maintenance, repair or replacement. While oil and gas supply from some North Sea fields is diminishing, it remains an active area of exploration, offering Neptuen a good mix of recurring revenue and contract work.

Neptune is believed to be close to clinching a deal to purchase an established subsea service provider in the North Sea. Such an acquisition is likely to be larger than the Sea-Struct purchase, with the potential to have a material impact on 2007-08 earnings.

With regard to Neptune's existing operations, Mr Lange said more than half the group's 2007-08 forecast revenue of $70 million had been confirmed. He noted that contracts that stemmed from recently acquired businesses were consistently higher than historical levels, as clients were more comfortable in awarding substantially larger and more complex projects to a $200 million listed company rather than a small private enterprise.

Based on consensus forecasts for 2007-08, Neptune is trading on a prices-earnings ratio of about 15. But these forecasts do not include the Sea-Struct acquisition or the impact of recent contract wins.

Consequently, the company's value could be in for a re-rating once analysts have crunched the numbers and upcoming developments are confirmed.
 
just thinking out loud - with this impending north sea acquisition, could it be that NMS are about to receive their european patent for nepsys ?
 
interesting to note the directors are wanting to vote in a resolution to be paid in shares, in lieu of their directors payment - and have a 3 year escrow placed on them.

a vote of confidence ?
 
interesting to note the directors are wanting to vote in a resolution to be paid in shares, in lieu of their directors payment - and have a 3 year escrow placed on them.

a vote of confidence ?

What is a 3 year escrow? (sorry I have no idea). Also SOB do you know what date the AGM is or where I could find out?
 
Escrow is a legal arrangement in which an asset (often money, but sometimes other property such as art, a deed of title, website, or software source code) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract such as payment of a purchase price. Upon that event occurring, the escrow agent will deliver the asset to the proper recipient, otherwise the escrow agent is bound by his or her fiduciary duty to maintain the escrow account. In this case it's shares, so the directors would have the shares held in trust, so they can't sell them for 3years. It was 3yrs, wasn't it??

It will be interesting to see how much NMS have spent on R&D in the upcoming report. The last one showed they spent 37k, previous was substantially more, somewhere between 400-600k. I assume the goal of the underwater welding drone could be close?? And the european patent close, as Son of Baglimit said.
 
Oh how I'd love to see some TA on this...any chartists out there able to show everyone some spiffy charts. Up up and away very shortly? Anyone else seeing similar?
 
excerpt from
http://www.theage.com.au/news/plann...1192940985748.html?page=fullpage#contentSwap1

Best supporting roles - the engineers

It is not just the resources stocks that are booming. Some of the best market performances in recent years have come from the diverse engineering companies and other contractors that provide construction and maintenance services to the minerals and energy sectors.

Take two of them, both S&P/ASX 200 stocks: Perth's Monadelphous Group provides project management, construction, maintenance and support services to resources companies and Sydney's WorleyParsons arranges design, management and support services for major resources projects.

According to Commonwealth Securities figures, in the three years to mid-October each company had rewarded investors with annual returns - dividends plus share-price appreciation - of more than 100 per cent. Had you bought shares in either company in October 2004, the value of your investment would effectively have more than doubled each year in the ensuing three years.

Three-year annual returns for some other resource sector support stocks include: Ausdrill 76 per cent, Austin Engineering 71, Leighton Holdings 77, Macmahon Holdings 60, RCR Tomlinson 67 and United Group 47. For investors, the question needs to be asked: can such stellar returns continue?

At Monadelphous - where the after-tax profit has soared more than 17-fold in just six years - management officials were cautious when announcing the company's June 2007 financial results.

According to an official company statement: "Capacity constraints in the form of labour shortages are now approaching a critical state and as a consequence any expectation of growth for 2007-08 should be treated with significant caution."

According to Rob Velletri, the company's managing director, "With a number of existing projects ramping down in the first half of 2007-08 and potential delays to near-term project opportunities, Monadelphous is expecting a softening of construction revenue in the first half of the new financial year."

However, some market experts believe these companies still represent excellent long-term potential. "They are in an amazing sweet spot that could continue for some years," says Charlie Aitken of Southern Cross Equities.

He points to BHP Billiton's $22 billion development program of more than 33 major projects, either under way or in the planning stages. "Someone has to build them," he says. "These are stocks for investors who aren't comfortable buying resource companies."

In some respects, they have less risk than resource companies. As Adnan Kucukalic of Credit Suisse says, their exposure is to production volumes rather than to commodities prices and production of Australian commodities continues to rise.

Simon Guzowski of Wise-Owl.com highlights two companies. One of these is Swick Mining Services, listed in November 2006, which provides drilling rigs. His other recommendation is Austin Engineering, which he says is working at full capacity.
 
and again as per previous posts, in the lead up to an announcement regarding an acquisition, there is pressure applied to keep NMS within a select price range (0.94 to 1.00)

could this be the price of the nms shares issued as payment ?

could it be a guide to the price of shares issued in a rights issue / placement ?

either way, we will certainly know by the AGM, if not by the release of quarterly figures next week.

you'd reckon that the signal theres no more acqs on the horizon will be when the SP is finally let run on its own...................passed patersons (soon to be revised up) $1.24 target, and quickly heading for $2.
the energy services sector is finally gaining cred in this resources boom......nice jump by MRM today - 9%
 
It will be interesting to see how much NMS have spent on R&D in the upcoming report. The last one showed they spent 37k, previous was substantially more, somewhere between 400-600k. I assume the goal of the underwater welding drone could be close??

looks like your wish didnt come true sophie - only $98k spent - and thats amongst 7 businesses.

r&d out the door for now you think.

maybe email lange seeking an answer in the AGM......unless you are going ?
 
Son of Baglimit, when the underwater drone becomes reality, which I am in no doubt it will, the share will rocket. Coupling the drone with the NEPSYS weld would see NMS become an incredibly sought after service. I'm sure all the large companies like Halliburtons, Shlumberger are keeping a close eye on NMS. NMS with the drone and weld would become an extreme pain in the ..... , as Lange already mentioned, although he never mentioned the drone.

As for AGM, it would be a good idea if someone asks for more information on the R&D, since they do have it on their site as a goal. An update would be nice.
 
Lange and team need to take a bow.
The new proposed takeover fits like another finger in a mutifaceted glove and, gives the company a BIG leg up into the North Sea.
I'm chomping at the bit for the new announcement....more good news no doubt.....least I hope so.
 
Plasma. Every bit as important, if not more so, is that NMS now have a foot in the door of renewable energy. CNM were awarded a $5m Grant today and that is their field
 
good post alba - very true about govt grants, as there are certainly plenty coming for such technology.
i see ross deeptech supply the tidal & wave energy sector - does anyone have info on that field within australia ?
 
from todays AFR - prior to the ann

"NEPTUNE PREPARES TO DIVE INTO NORTH SEA SERVICES"

Oil and gas engineering company Neptune Marine is preparing to reveal its eighth bolt on acquisition in just over a year and observers increasingly beoieve a more ambitious union with fellow player Mermaid Marine is required to add true critical mass.

Neptune is shortly expected to announce its latest acquisition, a company servicing the oil and gas platforms of the North Sea. The latest buy is expected to have cost $20-30 million.

The global shopping spree initiated by managing director Christian Lange since he joined the company in February 2006 has resulted in the company add engineering and surveying arms to to its core underwater welding business, as well as establishing a foothold in North America.

The build-up has added dramatically to the company's income stream, with its September quarter revenue of $18.3million eclipsing the 2007 full-year result of $15.5 million.

Neptune's share price has tripled since the start of the year, with its market capitalisation now more than $200 million.

Both Neptune and Mermaid provide services to the oil and gas industry but they do not directly compete.

While Neptunes' core businesses are diving , engineering and surveying, Mermaid provides ships that help service offshore oil and gas operations.

Mr Lange acknowledged the synergies that might result from a union with Mermaid, he was reluctant to comment further.

Hartleys analys Helmut Engelhard said the services offered by Neptune and Mermaid were complementary but said Neptune would need to ensure its suite of acquisitions was properly integrated before making overtures to Mermaid.

"Mermaid would be a big step for them and I'm not sure whether Mermaid shareholders would agree that Neptune are the best ones to drive Mermaid's assets", he said. "I take my hat off to Neptune for what they have done so far, but they still need to prove that they can tie it all together and prove that the whole is worth more than its parts".

The rising oil price has been a particular boon to oil and gas companies specialising in maintenance and repair work, with the higher prices extending the lives of wells and increasing the need to keep ageing equipment maintained.

Mr Lange said he hoped to build Neptune into a service company that would fulfil roles now carried out by a range of competitors, with the Australian range of services ultimately to be offered from bases in North America and the North Sea.
 
Son Of Baglimit,

If the guys in that forum, whom work in the ROV industry, are right??? And i'd say they know what they are talking about, why would they invent the information? They didn't even seem to know who NMS are, but yet knew that FIVE rovs were being built, and apparently from TWO sources.

That is incredibly significant news, but of course it's not confirmed. If this information is right, imagine the demand for a NEPSYS ROV?!?! Imagine the SP.

Son of Baglimit that Google find is one of your best, if not the best. Made my day! :)
 
i strictly take cash lol

happy to be of service.

interested to learn your interest in ROV's - connection, or just thinking blue sky on what NMS could do with it, in conjunction with nepsys.
 
Fantastic find, son of baglimit.

Maybe the R&D to utilise NEPSYS via ROV won't be incurred until after the ROVs are acquired.

As these "new build" ROVs are already more capable of repair work, maybe the R&D will be more of a post-delivery "applied" engineering and fitment issue, rather than "pure" advance R&D. The available ROV design options must have sufficient degree of suitablility to buy them in the first place.

Although, NMS must also have other uses for them (than NEPSYS) in the expanding suite of NMS services, esp. in the deeper water North Sea - so it is possible that they have sufficient non-NEPSYS applications to justify acquisition and still need to do serious R&D before "strapping a NEPSYS onto them".

Again, great work, thanks. Always feel well-informed from reading a lot of your stuff.
 
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