From offshore rigs to renewables, Bhagwan Marine has a multi-decade growth plan

Oil rigs are back online and Bhagwan Marine is in the driver’s seat
Bhagwan sets course for $60bn decommissioning market
Renewables, defence projects are also in its sights

Just a few years ago, many thought the offshore oil market was on a steep decline. Prices plummeted, rigs were left idle and projects came to a standstill.

Fast forward to today, and it’s a different story.

Rigs are getting back online, and projects that were gathering dust are now moving forward again.

“We came out of a downturn around 2020-2021, largely due to the impact of oil prices worldwide,” explained Loui Kannikoski, CEO of recently listed Bhagwan Marine (ASX:BWN).

During that period, many rigs were cold-stacked – basically, turned off and left unused.

“But now, a lot of them are coming back online, and the drilling activity has picked up dramatically,” he added.

With major fields like Gorgon, Wheatstone, and Barossa back in action, and new projects like Woodside’s Scarborough in the mix, the demand for marine support and logistics is soaring.

And this is where Bhagwan Marines comes in, providing the vital backup needed to keep things moving.

Bhagwan listed on the ASX in July 2024, aiming to capture that market rebound.

The company raised $80 million at $0.63 per share, positioning itself to expand its marine services across ports, nearshore, offshore, and subsea sectors.

From crayfish to rigs

Bhagwan, however, didn’t always operate in the oil and gas world. It began as a crayfishing business started by the Kannikoski family back in the 1950s.

Then, out of nowhere, in 1997, an oil company came knocking, asking to lease the family’s biggest crayfishing vessel.

That was the spark that set everything in motion. The company soon pivoted, trading nets for rigs and diving headfirst into the oil and gas game.

By 2000, Bhagwan Marine was born, starting off with just one vessel and a whole lot of ambition.

But the growth was rapid.

“By 2012, we had 140 vessels and 1000 people. It was a steep growth curve, no doubt about it,” Kannikoski recalled.

From those humble beginnings, the company has grown into a significant player in offshore logistics.

Decommissioning projects – the real gems

But while everyone’s focused on oil and gas exploration, the real goldmine could be in decommissioning.

As oil fields deplete, platforms and pipelines need to be safely removed from the ocean.

“Decommissioning is going to be a huge part of our business for the next 40-50 years,” Kannikoski predicts.

“With regulators making sure platforms are decommissioned when they need to be, the market for this work is only going to grow.”

Bhagwan recently knocked out one of the largest decommissioning projects in Australian history, helping Chevron to remove platforms from Thevenard Island.

Kannikoski sees the whole decommissioning market reaching $60 billion, far more than the $40 billion other experts predict.

With Australia’s offshore assets scattered around the continent, that’s potentially decades of work up for grabs.

In December, the company issued strong guidance for investors, expecting EBITDA to hit between $26m and $28m for H1 FY25 – a 26% to 36% jump from last year.

The upgrade follows the successful completion of another large-scale decommissioning project in the first quarter.

Importantly, the company delivered over 800,000 offshore working hours without a single lost-time injury.

Kannikoski emphasised that safety isn’t just a box to tick; it’s the foundation of Bhagwan’s business.

“We’re absolutely focused on making sure people get home safely.

“Every second of every day, our HSSEQ [Health, Safety, Security, Environment and Quality] team is ensuring that no one takes shortcuts. It’s something we have to constantly work on.”

Bhagwan’s other plays: renewables and defence

The company, however, isn’t just a one-dimensional player.

Apart from oil and gas, it’s providing a diverse range of services across ports, nearshore, offshore, subsea and even defence projects.

And right now, it’s locking in a spot in the booming offshore renewables game.

“The energy transition is happening, and we’re in the right place at the right time,” Kannikoski said. “We’ve got the offshore expertise to support renewables just like we’ve supported oil and gas.”

While most offshore wind farms won’t be fully operational until 2027 or 2028, Bhagwan’s already on the ground, providing marine support for survey work in the Bass Strait.

“What really interests me, however, is the ongoing maintenance,” he explained.

“Each wind farm will need about 20 years of maintenance. That’s solid, long-term work, and it gives the business a strong horizon moving forward.”

Bhagwan’s also setting its sights on the defence sector.

With years of marine logistics under its belt supporting the Australian Navy, Bhagwan said it’s now primed to expand as Australia ramps up investment in submarines and defence projects.

“We’ve been involved with the navy for a long time, but what’s coming next is multi-generational work,” Kannikoski said.

“We were at a conference in South Australia recently, and they were talking about 100 years of work in the submarine space.”

‘The horizon is bright’

With the market booming, Kannikoski said his commercial team is currently busier than ever, tendering for projects up to 2030.

The company is constantly exploring potential mergers and acquisitions (M&A) in order to grow, but with a clear strategy: smart growth, not just expansion for the sake of it.

“When we look at potential acquisitions, it’s not just about growing in size. It’s about strengthening our business,” said Kannikoski.

“We look for businesses that add new services or expand our geographic reach.”

He reiterated that Bhagwan is built for the long haul.

“Our family still owns 40% of the business. We’re not going anywhere any time soon.”

Despite often being compared to former listed player MMA Offshore, a rival taken private last year for $1 billion, Kannikoski said Bhagwan is following its own path.

“We’ve always been compared to MMA. Boats are boats, but we’re on a different course.

“The opportunities for us are huge, and the horizon is bright.”

The views, information, or opinions expressed in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.