Perth-based oil and gas contractor Valmec has announced a major growth plan, which involves expanding its asset services to account for half of the company’s order book.
Perth-based oil and gas contractor Valmec has announced a major growth plan, which involves expanding its asset services to account for half of the company’s order book.
Valmec, ahead of its annual general meeting today, said it would build out its asset services division to create a “one-stop shop” that provided a suite of services covering design, construction and maintenance to the energy, resources and infrastructure sectors.
The move is intended to balance the company’s recurring revenue streams.
Only 30 per cent of Valmec’s revenue comes from its asset services division, while 70 per cent comes from its construction services.
Valmec, based in Kewdale, is seeking to grow its share of revenue from asset services to 50 per cent of its order book, which currently stands at $93 million.
The company has identified an $893 million pipeline of work, driven by a gas-led economic recovery.
It comes about two weeks after Valmec secured a $16 million gas contract with Shell and PetroChina joint venture, Arrow Energy, for a project in Queensland.
Valmec managing director Steve Dropulich said the company’s new strategy was of low risk and high growth potential.
“By leveraging our current capabilities and experience, we are focused on developing a more robust business by re-cutting the revenue split to have more emphasis on multi-year, recurring contracts rather than being too reliant on construction projects,” Mr Dropulich said.
“We see a raft of opportunities emerging with governments across the country initiating big infrastructure investments, the promotion of a gas-led recovery, particularly on the east coast, and water infrastructure taking a high priority.”
He said the business was also entering a major maintenance cycle in the energy sector.
“We are also well placed for the emergence of hydrogen as a renewable energy source in Australia, thanks to our involvement in the construction of Hydrogen Park South Australia,” Mr Dropulich said.
Valmec was contracted by Australian Gas Infrastructure Group in 2019 to build the onsite infrastructure and renewable gas production facility at Hydrogen Park in Adelaide.
Mr Dropulich said Valmec would seek out merger and acquisition opportunties to build out the company's service offering and expand its customer base.
The business is targeting revenue of $300 million by the 2023 financial year. By comparison, it generated revenue of $112 million in FY20.
Valmec shares closed up 9.8 per cent to trade at 22 cents.
