Chinese oil and gas drilling equipment manufacturer Honghua Group has announced that it intends to dispose of its entire offshore business segment amid the uncertain outlook in the offshore market.
The company plans to sell its 100% indirect equity interest in Honghua Offshore Oil & Gas Equipment (Jiangsu) through public tender on the Shanghai United Assets and Equity Exchange. Additionally it will sell its entire LNG-related business, including 30% equity interest in Prime FSP, 25% equity interest in FSP LNG and 70% equity interest in Hong Kong Tank Tek.
The company said the price for the sale will be based on an asset appraisal by a qualified appraisal institution.
Honghua Group believes that its offshore drilling business was adversely impacted by uncertainty and price fluctuations in the global oil market over recent years.
“The company held positive opinion towards the future development of LNG industry, but turning the business to LNG industry for offshore segment requires strategic partners, capital investment and other related resources. In light of such market conditions, the board is of the view that the potential disposal, if consummated, would help balance the short-term and long-term interest of the company and its shareholders and improve the group’s capital structure, resource allocation and financial performance,” Honghua Group said, explaining the rationale behind the potential disposal.