Offshore Support Vessel Shipyard Flourishes

Norway-based shipbuilders, STX  Holdings, outperform the FTSE  Straits Times Oil & Gas Index

The offshore support-vessels builder has outperformed the FTSE Straits Times Oil and Gas Index, of which it is a component, making year-to-date returns of 38.8 per cent compared with the index's 16.8 per cent, reports 'Sgmarine Industries'.

First and foremost, STX is in the right place at the right time, with the conventional shipbuilding sector having taken a hammering because new ships are no longer being ordered.

STX OSV, however, has been incredibly blessed with orders. Vessels built by STX OSV are tied to the oil-and-gas industry, which is in the midst of expanding into deeper-water exploration as shallow water or land sources of energy dry up.

STX OSV builds the very kind of more complex and advanced vessels needed for these offshore drilling activities - of which there are, compared to other classes of merchant vessels, relatively few in the world today. This sets the scene for what we have seen for STX OSV, particularly in 2011 and 2012. It has under its belt about 6.7-6.9 billion krone (S$1.43- 1.47 billion) worth of orders so far this year, surpassing analysts' initial expectations.