buy from argonaut, page-3

Agree with the Bell Potter caution about increased competition - its only natural that the size and number of projects off the north west coast will attract interest from marine service companies all over the world.

But for completeness however, BP should have qualified its comments by highlighting Mermaid's advantage in that, unlike the others, it has a supply base/laydown area, dedicated heavy loading wharf, barge loading facility and slipway slap bang in the middle of the main game, as well as a completmentary facility in Broome to service the Browse basin projects.

They are going to be pretty hard to beat to the ball!

In particular, the decision by Mermaid in recent years to build a slipway at Dampier was an important one. While it principally services its own boats and is therefore not a huge contributor in terms of revenue generated, the savings to Mermaid in not having to steam their boats to and from Fremantle or Darwin for repairs and routine servicing are considerable.

Their competitors have to endure at least a week of costly down time while they steam to Freo or Darwin - or pay Mermaid to slip their boat at Dampier.

Either way Mermaid wins.

Even when Mermaid does miss a contract, such as one of the Gorgon supply vessel contracts that went to OMS, the OMS boats still need to dock at the Mermaid jetty, and load materials through the Mermaid stevedoring unit that have been stored in the Mermaid lay down area or the Mermaid supply base warehouse.

Either way Mermaid wins again.

I think it is material to acknowledge that each of the four new boats Mermaid purchased last year have medium to long term contracts secured.

In my view the biggest threat to Mermaid is not securing work for its expanded fleet (this might be a problem in 10 years time but unlikely now), but manning all of their boats and managing labour costs in a tightening labour market.

So far they seem to be managing this aspect pretty well.