PACC OFFSHORE: Plots Steady Course in Rough Seas

Veteran seafarer Captain Gerald Seow, CEO of PACC Offshore Services Holdings Ltd (POSH). (Photo: Company)

For veteran seafarer Captain Gerald Seow, the lure of the ocean has always been irresistible.

The Chief Executive Officer of SGX-listed PACC Offshore Services Holdings Ltd (POSH) recalls splashing in the sea as a child, and paddling boats ranging from flat-bottomed wooden sampans to traditional outrigger sailboats known as prahus.

"I've always had a passion for the sea, and spent all my time on boats," Seow smiled.

"When you hop into a boat, put up the sail, and set off into the beyond with a few cans of sardines, some loaves of bread, and a magnetic compass - that's an adventure!"

Seow went to sea at 18, starting his career with Neptune Orient Lines Ltd. Three years later, he was certified as Second Officer, and joined the crew of the tanker Neptune Aries. The memory of one balmy evening in the Saudi Arabian port of Ras Tanura remains indelibly etched in his mind.

"It was pitch dark, and we had just cleared port.

As the ship sailed out, the captain said to me, 'Mate, she's all yours', and walked off the bridge.

He had entrusted the ship to me," he recalled.

In that instant, Seow gazed into the clear waters of the Persian Gulf and saw a bluish-white phosphorescence bloom in the wake of the ship's propellers, created by billions of tiny bioluminescent phytoplankton.

"That was an unforgettable moment. I was in command of a multi-million dollar vessel, and the realisation filled me with a huge sense of pride and achievement."

Ten years later, Seow came ashore to serve in various senior management positions within the NOL group in both US and Singapore. "Running operations for NOL in a foreign country taught me a lot, and I got to experience the cycles in the shipping industry."

Seow remembers the slew of measures that NOL management undertook to overcome tough market conditions, which eventually helped the group to turn around its US operations.

"Those years taught me the importance of diversification, and how to manage risk. One must always challenge the status quo - you need to continue to grow and evolve, or die."

In 1996, Seow joined Pacific Carriers Ltd (PCL) - part of Malaysian billionaire and Asian sugar king Robert Kuok's business empire - and was instrumental in developing its shipping liner and offshore marine services businesses. The latter was eventually spun off as POSH.

"Basically, I'm fascinated by things that float - be it sailing boats, naval vessels or merchant ships," he grinned. "The world is what it is today because of structures that float and carry you around. They've shaped history."

Many people look at a business in terms of how to make a quick buck, but don't focus on providing solutions. So when the market hits a downturn, they become irrelevant.

- Gerald Seow
CEO

PACC Offshore Services Holdings

(Photo: Company)

As at 31 December 2016, the Group's cash balances stood at US$15.1 million, up from US$13.8 million as at end-2015. At end-June 2017, its cash and cash equivalents were stable at US$14.8 million.

POSH's strong balance sheet has enabled it to clinch landmark projects from global oil majors, including Shell, Inpex and Total. "Some of our competitors were awarded contracts, but could not deliver due to balance-sheet distress," he noted.

"Having been in shipping all my life, I've always known that cashflow is king. Because of our prudent management, we're seen as a reliable service provider to our customers."

As at 30 June 2017, the Group has deployed six vessels to the Middle East to perform their charter contracts with a national oil company, and another six will be deployed progressively over the remainder of this year.

POSH has executed a couple of key projects this year. In the June quarter, it completed the towing of the INPEX Ichthys Central Processing Facility - the world's largest semi-submersible platform located in Browse Basin, off the Western Australian coast.

Last month, it completed the towing of the Shell Prelude Floating Liquefied Natural Gas (FLNG) vessel, which is longer than four football fields and the largest offshore floating facility ever constructed.

Following the arrival of Shell Prelude in Browse Basin and connection of the 16 mooring lines, POSH Arcadia - the Group's state-of-the-art, 750-capacity Semi-Submersible Accommodation Vessel (SSAV) - will provide accommodation support during the hook-up and commissioning phase of the project.

More recently, POSH also completed towing of the Ichthys Floating Production, Storage and Offloading (FPSO) facility. In the final quarter of 2017, it will begin towing and positioning operations for the Egina FPSO platform - Total's flagship project that will be located off the coast of Nigeria.

Maintaining the Group's operational excellence is crucial as it executes these bellwether projects. "Right from day one, safety has been our paramount concern, because this is what our clients demand and expect of us," Seow noted.

The Group also makes it a priority to invest in the training, development and welfare of its staff. "Our crew who work on our ships - they are the face of the company and look after our most expensive assets. I know what a difference their commitment makes to our execution and performance."

He is also cognizant of the degree of mental strength required to be at sea.

"I've been a seafarer myself, so I understand what it takes to be away from home and loved ones for long periods of time."

Looking ahead, Seow remains confident of the industry's prospects.

"According to reports from oil majors, more than 50% of energy will continue to be sourced from oil and gas over the next 30 years. The long-term viability of the business is there."

"We're confident of riding through the downturn successfully, and are preparing ourselves for the recovery."

The Group is focused on reducing operating expenses across operations, pursuing charters that generate positive cashflow and earnings before interest, tax, depreciation and amortisation (EBITDA). It is enhancing its assets by offering more advanced solutions - thereby boosting revenue per vessel - as well as optimising resource allocation to capture longer term expansion opportunities.

"We understand what our customers need, and that gives us an edge."

A lot of industry consolidation is going on, and that's great, because it will boost pricing power. If a good acquisition opportunity arises that makes sense, we might consider it.

- Gerald Seow
CEO

PACC Offshore Services Holdings

• Oil prices remained below US$50 per barrel despite efforts by oil-producing countries to curb oil production, resulting in a lack of new field development.
• The oversupply situation for all vessel categories continues to exert pressure on charter rates and vessel utilisation, and this will have a negative impact on the Group's financial performance for the year.
• While other oil-producing regions have slowed down given the weak market conditions, the Middle East and West Africa remain key regions where oil majors continue to issue tenders for vessel requirements. The Group will continue to participate actively in tenders and focus on these regions.