Last checked at 
By Rujun Shen and Yantoultra Ngui
SINGAPORE/KUALA LUMPUR, July 22 (Reuters) - From haulingrigs to delivering toilet paper, firms from Southeast Asia arecornering lucrative niches of the oilfield services market todeliver growth that far outstrips that of much larger globalpeers.
SapuraKencana Petroleum and Ezion Holdings lead a group of top 20 Malaysia- and Singapore-listedcompanies that grew assets by 30 percent to $8.4 billion lastyear, according to Reuters analysis of company data.
Their expertise ranges from laying steel pipes at the bottomof the ocean and moving huge rigs from the South China Sea tothe Gulf of Mexico, to delivering provisions for the rig crews.
The breakneck expansion has driven the shares ofSapuraKencana up by 30 percent and Ezion by 36 percent thisyear, outpacing gains in their local markets and for largerglobal rivals like Schlumberger and Technip.
But it also poses the largest risk for the sector as theyrun into bottlenecks ranging from talent to equipment.
"In many cases, they are squeezed with high costs and theneed to provide competitive prices," Mark Mobius, executivechairman of Templeton Emerging Markets Group, told Reuters byemail.
"Nevertheless, well-qualified companies with specialtechnical capabilities and unique know-how can do very well andprovide excellent profitability," said Mobius, who oversees morethan $50 billion in emerging markets equities at FranklinTempleton Investments.
Many firms are heading to debt and equity markets to fundtheir asset buys. Conglomerate UMW Holdings Bhd plansto spin off its oil and gas services unit and raise $740 millionin what could be Malaysia's largest IPO this year.
Singapore's Swiber Holdings, which owns the world's largestfleet of offshore construction vessels for shallow water andwants to venture into deepwater, is looking at Islamic bonds, orsukuk, after raising $754 million from corporate bond markets.
"You'll see more companies like ourselves looking at sukuk,"Francis Wong, group chief executive officer at Swiber, toldReuters. "Because we have heavy capex spending, it fits verynicely into one of the models under sukuk which is asset based."
RIGS AND SHIPS
SapuraKencana, at 24.3 billion ringgit ($7.61 billion) thebiggest offshore oilfield services firm in Singapore andMalaysia by market value, has moved to acquire assets in a bidto win bigger jobs. In April it bought over the entire tenderrig business of Norway's Seadrill Ltd for $2.9billion.
With that one purchase, the firm now owns more than half ofthe world's 43 tender and semi-tender rigs - platformssupporting offshore oil production in both deep and shallowwater - and a client list that includes Chevron Corp,Shell and BP Plc.
"The fields are getting smaller and deeper, requiringcapital intensive drilling rigs," SapuraKencana CEO ShahrilShamsuddin told Reuters.
Ezion Holdings' market value more than quadrupled since 2011to S$2.2 billion as it dominates the Asian market for lift-boats- a type of maintenance support vessel.
It has a 26-strong fleet of lift-boats and service rigs, upfrom two in 2010, and is expected to increase this to 31 in2015, said CLSA analyst Saurabh Chugh in a report, citing Ezionand CLSA data.
These Southeast Asian firms have been able to grow fromSingapore, a energy trading hub home and world's two largestoffshore rig builders - Keppel Corp and SembcorpMarine, and oil-exporting Malaysia.
Malaysia's state oil firm Petronas awards risksharing contracts (RSCs) to extract more from marginal anddepleted fields under a 300 billion ringgit ($93.93billion)capex programme from 2011 to 2015.
Petronas has so far awarded three out of the 25 RSCs, whichhave a rate of return of up to 20 percent, a senior state oilfirm executive said. Industry analysts have said those in therunning for RSC are among Malaysia's top ten services firms.
MARGIN SQUEEZE
With offshore oil and gas spending in Asia and Australiaseen growing 11 percent this year to $104 billion - second toLatin America in scale, competition for equipment and peoplehave grown along with margin pressures.
Despite bagging consecutive jobs, Singapore's Ezra HoldingsLtd reported a 68 percent plunge in third-quarterprofit, as its subsea division suffered losses with projectdelays and cost overruns.
SapuraKencana said it faces similar risks even though itmakes average margins of 10-12 percent globally.
"Each project we get is like $200 million to $300 million.So if you have a 10 percent swing to your cost...that is a lotof money," SapuraKencana's Shamsuddin said.
