SBI Offshore Limited has agreed to form a joint venture (“JV”) with Axon Energy Products Inc. (“Axon”) of the United States to market, install, commission and provide after-sales services for oil and gas drilling equipment and systems in Asia in a major strategic business shift for the offshore and marine (“O&M”) player.
SGX Catalist-listed SBI Offshore said it will take up a 70%-stake in Singapore-based JV company, Axon Rig Concept & Design Asia Pte. Ltd. (“ARCDA”), with Axon taking the balance 30%. Headquartered in Houston, Texas, Axon is a global oilfield equipment company specialising in pressure products, well intervention products, drilling products, rig concept and design services, downhole products and tubular products.
As ARCDA will be a subsidiary of SBI Offshore, the Group will be able to consolidate its revenue and profits, a significant departure from its previous core business activity of distributing O&M equipment and deriving commission income.
Chan Lai Thong, Executive Chairman of SBI Offshore, said, “Under this arrangement ARCDA will be able to take on larger projects in Asia while moving up the value chain. SBI Offshore will also be able to recognise potentially significantly higher revenue from the JV compared to commission income.”
“This JV will transform the Group into a value-added oil and gas player. This shift in business model and revenue model is in line with our efforts to reposition the Group as an integrated engineering and equipment solutions provider. Axon’s portfolio of drilling equipment products and services caters to onshore and offshore drilling activities and will complement our plans to manufacture and supply land rigs,” he added.