PETALING JAYA: Icon Offshore Bhd is expected to be profitable this year driven by its million ringgits worth of contract for its newly acquired jack-up drilling rig.Maybank IB Research estimated that Icon would turn profitable in the financial year 2021 from its rig’s ops, generating a net profit of US$6mil-US$8mil per annum, while its offshore support vessel (OSV) operation would lower lowers its losses on thanks to higher utilisation level at 62%.“We are positive on Icon for securing a contract for its jack-up rig. We are positive that it would be the catalyst to turning its financials around,” it said in a report yesterday.On Wednesday, Icon announced that it had secured a US$13.3mil (RM53.85mil) order to supply a jack-up drilling rig to Petrofac (Malaysia-PM304) Ltd, raising the group’s order book to RM768.8mil.The duration of the contract is for 180 days or six months 6 months up to September 2021.The project is for Icon's newly acquired jack-up rig that it bought from Perisai Petroleum Teknologi Bhd for US$42.54mil (RM177mil).“We are positive, but not entirely surprised, by this development. Based on the contract value, it equates to a daily charter rate (DCR) of US$74,000, and as such appears to be above the prevailing market of US$68,000-US$70,000,” it saidIt pointed out that that the contract tenure is shorter than that initially expected but would be in line, should Petrofac exercise the extension option. Maybank IB remains it “buy” calls on Icon and expected that while the outlook is improving but the pace of recovery will be gradual, backed by its continuous efforts to optimise costs and OSV utilisation.Merger and acquisition is a key catalyst to unlocking values, it added.“OSVs DCR, utilisation and operating expenditure are Icon’s key earnings drivers. Variations in any of these parameters will impact profitability.“Prolonged weakness in OSV utilisation and earnings expected would have a detrimental impact to its cash flows,” Maybank IB said.
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