YangZiJiang

YangZiJiang: Grp has finally reeled in its first offshore vessel contract, two years after it bid for a stake in SG's PPL Holdings to acquire rigbuilding capabilities. Grp’s 78% owned Jiangsu Yangzijiang Offshore Engineering will build a jack-up rig for US$170m for Explorer I. This contract includes an option to construct one additional identical unit. The self-elevating offshore jack-up drilling rig, will be built at Yangzijiang's existing Jiangsu New Yangzi shipyard. DMG note that the offshore contract would boost Yangzijiang's stock somewhat, as it does generate some excitement for the stock, but if we focus on margins, the news might not be so effective, as the price appears on the low-end of similar orders; the shipyard would probably be going through the learning curve stage, so margins won't be too attractive. Separately grp declared another offshore venture with SSP Asia, an Asian affiliate of SSP Offshore Inc, which is listed on the Canadian TSX Venture Exchange, to come up with the engineering plans and detailed designs for a FPSO unit that SSP will market to its customers. Subsequent orders for the unit will be built at Yangzijiang's yard.