In a world where the oil and gas (O&G) industry is often buffeted by market fluctuations, Steel Hawk Berhad has charted a course of sustained growth and resilience. Since its inception in 2012, the company has steadily expanded its capabilities, starting from a single chemical injection skids contract to becoming one of the key operating expenditure (opex) engineering, procurement, construction and commissioning (EPCC) contractors in Malaysia’s energy sector.

“Our growth trajectory has been nothing short of extraordinary,” deputy chairman and executive director Dato' Sharman K. Michael notes in a recent interview as he reflects on the company’s journey.

After obtaining its first licence from state-owned oil giant Petroliam Nasional Bhd (PETRONAS), Steel Hawk secured its first contract for nine chemical injection skids under its EPCC services in 2013 from PETRONAS Carigali Sdn Bhd.

As the group continues to win tenders from PETRONAS through the past decade, to Dato' Sharman, 2019 was a major milestone for Steel Hawk, as it established itself as a one-stop service provider for facilities improvement/maintenance of topside O&G facilities. Steel Hawk was awarded a 3+2 year onshore facilities maintenance, construction and modification services (OnMCM), now into its second extension period of another year — including chemical injection skids, fire-rated doors and pipeline inspection gauge (or pig) trap systems.

This came after Steel Hawk secured its first price agreement from PETRONAS Carigali in December 2018 that involved the provision of OnMCM, solidifying its foundation as it listed on the LEAP Market in 2021, and subsequently transferred to the ACE Market earlier this month.

“From a 100% reliance on PETRONAS in our early days, we have diversified our customer base significantly, with PETRONAS now contributing around half of our total revenue, while the rest comes from other energy players,” he says.

To Sharman, an engineer by training with two decades of experience, this strategic diversification is no accident, as Steel Hawk has meticulously positioned itself within the industry’s value chain, thriving in its niche as an opex contractor focused on maintaining and upgrading existing assets rather than embarking on new infrastructure projects.

“Our ability to weather market fluctuations comes from our specialisation in EPCC services, which are critical to the ongoing operations of our clients,” he explains. “Even as oil prices swing, the demand for maintenance and upgrades persists, allowing us to sustain growth and continue expanding our technical capabilities.”

With a team of 50 highly qualified in-house technical personnel and a commitment to excellence, Steel Hawk is well prepared to continue its upward trajectory as it transitions to the ACE Market, solidifying its role as a cornerstone of Malaysia’s energy sector.

More than half of the RM13.5 million proceeds raised from the transfer of listing exercise are meant to construct Steel Hawk’s new Teluk Kalung Facility 2 in Terengganu, increasing its capacity by five times to 65 metric tonnes (MT) a month. The facility currently has a fabrication capacity of 13MT a month.

“With the limitations of our fabrication services, we have been subcontracting some of our works outside to third parties, so our mitigation strategy in the long term will be to actually have it all performed in-house when the new facility is up and running,” says Sharman.

The company boasts a team of 71 permanent employees, 50 of whom are qualified technical personnel with expertise across various segments of the engineering sector.

“In the next 12 to 18 months, with our Teluk Kalung Facility 2, which is going to be five times bigger, we will need more technical people. We will need a growth of 20% in our technical employees — so from 50 now, maybe another 10 to 12 people will be added,” he says. “We have invested heavily in building a technically strong team that can handle the complexities of our projects.”

Sharman is also confident that the O&G industry is here to stay with global oil demand from the petrochemical industry expected to grow to 18.6 million barrels a day by 2045, from 14.3 million barrels a day in 2022.

“The continuation of demand is there, and Malaysia is actually blessed with two different resources; we have crude oil and natural gas,” he says, while highlighting that PETRONAS’ near-term activity outlook signals favourable demand conditions of the O&G services and equipment industry.

Sharman notes that PETRONAS’ capital expenditure (capex) allocation between 2023 and 2027 is expected to be 43% higher than in 2018 to 2022.

The expansion of PETRONAS’ operations is expected to drive increased demand for Steel Hawk’s services. Opportunities are arising in the near term from the new development of Langkasuka Basin, a newly discovered oilfield running along the west coast of Peninsular Malaysia.

Post-listing in 2021, Steel Hawk continued to grow from strength to strength, with net profit more than doubling to RM5.8 million in the financial year ended Dec 31, 2022 (FY2022) and expanding another 24% to RM7.2 million for FY2023.

Looking ahead, Steel Hawk is poised for further expansion, driven by the robust outlook for Malaysia’s O&G industry. The company is currently participating in multiple tenders and anticipates securing several new contracts in the coming years.

“We are confident in our ability to maintain our growth trajectory,” Sharman states. “With a pipeline of contracts extending well into 2027 and beyond, and our ongoing efforts to expand our technical workforce, we are well positioned to capitalise on the increasing demand for our services.”

Steel Hawk’s growth strategy also includes a focus on emerging opportunities in the renewable energy sector, in which the company plans to leverage its EPCC expertise to enter new markets without shifting away from its core competencies.

Sustainability and governance are also central to Steel Hawk’s long-term strategy. The company has embedded environmental, social and governance (ESG) principles into its operations, earning accolades such as the Gold Award for Governance, Reporting and Transparency from the ESG Positive Impact Awards 2023.

“Our commitment to ESG is not just about compliance,” Sharman emphasises. “It is about positioning ourselves as a forward-thinking company that can meet the evolving expectations of our stakeholders.”

With these foundations in place, Steel Hawk is not only securing its future in the traditional O&G industry but also paving the way for growth in the renewable energy space, ensuring that it remains a key player in Malaysia’s energy landscape for years to come.

With the oversubscription rate of 276.83 times received from the Malaysian public for its initial public offering in conjunction with the transfer of listing from the LEAP Market to the ACE Market, Sharman is overwhelmed by the confidence of retail investors in Steel Hawk and particularly in the O&G industry.

“This keeps the momentum within the organisation growing as we are confident and hopeful of the company’s growth and shareholders’ expectations,” he adds.