MANAGEMENT DISCUSSION AND ANALYSIS (CONT’D) According to Kenaga Investment Bank Research, exploration activities are expected to ramp up significantly in 2026, which set up for more upside potential for service providers, such as our Group, in the longer haul of 2027 or beyond. However, the global OSV market continues to face chronic under-investment as the global fleet ages progressively each year, with approximately 80.0% of the global OSV fleet will be over 20 years old by 2035, indicating that a significant portion of vessels may no longer be in optimal working condition if substantial reinvestment in fleet renewal does not occur. Based on data from Bank Pembangunan Malaysia Berhad, Malaysia’s vessel fleet is now averaging at 12 to 15 years due to minimal newbuild activity since 2016, which is still within the optimal age but would not turn sub-optimal in a few years’ time. This is a sign of chronic under-investment in the subsector for the last decade which would eventually cause an oversized squeeze on vessel supply in the longer run, potentially nearing 2030 as average age of fleet inches closer to 20 years. Typically, major clients require OSVs to be no older than 15 to 20 years, depending on vessel type, for longerterm charters exceeding 12 months, where uptime is critical. For shorter-term jobs, older vessels may still be deployed if well-maintained, with lifespans extending up to 30 years, subject to audit and insurance clearance. Our Group has taken strategic steps to take into account local demand conditions as well as the inherent cyclical nature of the local OSV market, to ensure continued profit resilience and sustainability. We have already deployed both of our own and one third-party AHTS to the Middle East, and all 3 are already being chartered to customers there. We have also deployed 1 AWB to the Middle East and expect the charter for this AWB to commence by the second quarter of FYE 2026. These are part of our efforts to reduce concentration risk and shift more focus to international markets, thereby insulating our Group from changes in the local business environment. We have also taken steps to recalibrate and renew our fleet of vessels over the past 18 months. We have entered into 3 shipbuilding contracts to construct more modern, environmentally-friendlier vessels with higher specifications (1 DP2 AWB and 2 DP2 AHTS) which we expect to be available for charter from 2027 to 2028 onwards. We also disposed of 2 AWBs during this period as part of our fleet renewal process and acquired a cable-laying barge, which is currently being deployed to a charter in the Middle East. These strategic steps will support the resilience of our long-term business prospects. (Source: Kenanga Investment Bank research) FUTURE OUTLOOK AND PROSPECTS (CONT’D) 0 50 100 150 200 250 2028 2027 2026 2025 AHTS�100MT� AHTS>100MT FCB PSV/SSV Workboat/Work Barge CPV/SOV LCT UV 45 42 41 17 27 11 7 44 41 40 17 26 11 7 4 4 44 37 36 15 24 10 6 4 48 45 43 18 29 12 7 4 Contracted 194 190 172 206 (Source: PETRONAS’ Activity Outlook 2026-2028 Report) No. of Vessels Supporting Drilling (Exploration and Development) and Projects Vessels Supporting Drilling and Projects AWB and barge requirements projected at 26 vessels while AHTS <100 MT are projected at 44 vessels in 2026 for drilling (exploration and development) and projects support, predominantly sourced through PACs panel contractor frameworks, as illustrated in the graph below:- 32 KEYFIELD INTERNATIONAL BERHAD 202001038989 (1395310-M)
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