STX OSV Wins $139M PSV Order Fueling Hopes of Supply Vessel Pick Up

STX OSV Holdings Limited, a global designer and shipbuilder of offshore and specialized vessels, has announced it has secured new contracts for the construction of two Platform Supply Vessels (PSV) for Norway’s Island Offshore. The total value of the contract is approximately NOK 750 million (US $139million).

The vessels will be of Rolls Royce’s UT 776 CD design, with an overall length of 96.8 meters with a beam of 20.0 meters, and the deadweight will be 4800 DWT.

Deliveries are scheduled from STX OSV Brevik in Norway in the first and third quarter 2013 respectively. The hulls of the vessels will be delivered from STX OSV Braila in Romania.

The contract for the second vessel is subject to certain conditions being fulfilled before the end of 3Q 2011.

Pictured: MV ISLAND CHIEFTAIN courtesy Island Offshore

DOW JONES MARKET ANALYSIS:

STX OSV (MS7.SG) may get a boost after it wins contracts worth NOK750 million (US$139 million) from Norway’s Island Offshore Group to build two platform supply vessels, fueling hopes the rig replacement cycle will now translate into a pick up in supply vessel orders. In a recent note, CLSA says “with rig new building activity having picked up strongly since October 2010 and the demand for production platforms rising, we expect the level of OSV ordering to pick up by year end. On top of this the AHTS (Anchor handling tug supply) fleet is on average 17 years old and in need of replacement. With an increasing focus on safety and quality, there will be rising demand for vessels built by experienced yards, such as STX.” The house expects STX OSV to gain NOK11.6 billion worth of new orders in 2011; its has an Outperfrom call and S$1.40 target. The shares closed up 0.8% at S$1.22 Thursday; up 54% since listing in November 2010.

Dow Jones & Company, Inc.

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