It’s been a busy time for Transfield Services with two new service contracts announced after media speculation emerged that the company and UGL Ltd might be a good fit (according to media reports which reckoned UGL bosses could be interested in a deal).
The speculation and new contracts came a couple of days after the company took analysts on a tour of its Easternwell onshore oil and gas services group in Queensland, and provided an update with an earnings cut.
That update included news of an $80 million services contract with QGC, which is a major coal seam gas operator in Queensland and the driving force in BG Group’s Queensland coal seam gas hopes.
But Transfield also revealed an $8 million hit to Easternwell’s previous $40 million profit contribution estimate for this financial year, thanks to the floods and very wet weather in Queensland.
Easternwell was acquired in December of 2010.
Yesterday Transfield said it had signed an agreement with chemicals group Qenos to provide services to its A$125 million Altona expansion.
Transfield said it will provide construction management, detailed planning, bulk procurement, execution of mechanical, electrical and instrumentation works and management of specialist contractors. Planning for the project execution is expected to commence this month with construction beginning in early 2012.
In the second announcement, Transfield WorleyParsons, the 50/50 joint venture between Transfield Services and WorleyParsons, revealed a $65 million contract to provide Hook-Up and Commissioning(HUC) services for Woodside-operated North West Shelf Project’s North Rankin B Platform off the north coast of Western Australia.
The services will be provided over a 21 month period starting this month.
The agreed scope of work includes the provision of labour and materials for the hook-up and assistance with pre-commissioning and commissioning of relevant systems for the HUC of the integrated float over deck. The work covers both the onshore planning phase and the offshore implementation phase.
In January 2010 the JV signed long term contracts with the Woodside-operated North West Shelf Project to provide brownfield project and maintenance services to offshore gas production and onshore Liquefied Natural Gas (LNG) and domestic gas processing facilities in Western Australia.
At the end of March Transfield Services’ associate, Transfield Services Infrastructure Fund (TSI) received a non-binding, indicative approach from Thailand based Ratchaburi Electricity Generating Holding PCL (RATCH).
The proposal is for the acquisition by RATCH of the stapled securities in TSI Fund not owned by Transfield Services for a price of 85c per security, by way of schemes of arrangement.
As part of the proposal, RATCH would also acquire a majority of Transfield Services’ holding in TSI Fund for 85c per security, subject to downward adjustment if certain performance criteria are not met during a deferred payment period, such that Transfield Services reduces its holding from 43.8% to 20%.
Transfield Services said it had signed a Co-operation Agreement with RATCH to negotiate in good faith and to work together to finalise a series of ancillary but inter-conditional transactions between Transfield Services and RATCH relating to the ongoing ownership and management of TSI Fund.
The upshot of a busy day of announcements and the ongoing speculation about corporate activity for the shares saw TSE shares rise 4c to $3.47 on meeting.
They fell 3c yesterday to $3.46.
