In what can be considered a smashing end to its year, material tech company Matrix Composites & Engineering (ASX: MCE) has received a purchase order for approximately $44 million from multi-national oilfield services company Saipem.
As per the order, the Company will produce and deliver its Subsea Umbilicals, Risers and Flowlines (SURF) distributed buoyancy modules for Saipem, which will be used for a Floating Production Storage and Offloading (FPSO) system within a project in Brazil.
This order is a massive deal for Matrix, which holds a $33.6 million valuation. In comparison, Saipem, an Italian multinational oilfield services company, holds a market cap of $3.45 billion and is one of the largest such companies in the world. In 2022, the Company’s revenue amounts to $14.30 billion.
Through this deal, Matrix also taps into the lucrative South American market. Brazil is the eighth-largest global oil producer with the largest recoverable ultra-deep oil reserves in the world. About 97% of its production is offshore, making SURF products a necessity.
Matrix Chief Executive Officer Aaron Begley commented, “Our ability to methodically capitalise on the resurgence of activity in our traditional offshore buoyancy markets in 2022 has culminated in this very substantial purchase order.”
This order builds on the Company’s previous ones accumulated this year. In August 2022, it secured a $16 million SURF order, at which point Matrix decided to look for opportunities in the South American market. In June 2022, it secured a purchase order worth approximately $14 million for the supply of a Deepwater Drilling Riser Buoyancy System in Asia.
Begley added, “We now have approximately $77 million of secured work carrying us through until at least the end of FY24, which gives us a strong financial platform as we continue to enhance our diversification in the energy and resources sectors, as well as broadening our capabilities into clean energy renewables.”
The project will utilise Matrix’s state-of-the-art carbon fibre syntactic foam technology and API 17L V2.0 certified distributed buoyancy modules and clamping systems. All equipment will be built utilising Matrix’s existing capacity at its advanced composites production facility in Henderson, Western Australia. The manufacturing will begin during the first quarter of FY2024 with full delivery taking place within that financial year.
Matrix Composites and Engineering specialises in the design, engineering and manufacture of composite and advanced material technology solutions for the oil and gas, civil and infrastructure, resources, defence and transportation industries. In FY22, the Company delivered revenue of $28.6 million, up 60 per cent on its FY21 result. It also greatly brought down its net loss from $27.9 million to $4.8 million in FY22.
This new order significantly pushes Matrix’s revenue ahead, already surpassing FY22’s full-year revenue and how.
According to Begley, this is further bolstered by “the well-timed and prudent convertible note issue” worth $7.5 million that Matrix undertook earlier this month. Thanks to that, it has more working capital to see through the expanding work pipeline.
He is also aware of the game-changing potential in the South American market. Given that Brazil plans on spending $619 to $678 billion on oil and gas exploration and production (E&P) between 2021 and 2030, the Company needs to play its cards right if it wants to rake in the money.
For Matrix, this is a great position to be in especially being in the first half of the new financial year. It’s also a great Christmas gift for its shareholders. Since the announcement, its share price has gone up by 21.7% to 28 cents per share.
Alinda is a Business Reporter for The Sentiment
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