KUALA LUMPUR: SapuraKencana Petroleum and Petrovietnam Technical Services Corporation are jointly bidding for a construction contract off India’s west coast, AmInvestment said.
Quoting a report by oil and gas magazine Upstream, the research house said on Tuesday the contract was potentially worth up to US$300mil for Oil & Natural Gas Corporation’s Neelam processing platform and other facilities,
SapuraKencana's pipelay support vessel Sapura Onix at the IHC shipyard in 2015.
The Neelam workscope involves a new processing platform with a topside weighing about 5,500 tonnes and it is bridge-linked to an existing platform, two new wellhead platforms and three clamp-on structures.
AmInvestment maintained its Hold call on SapuraKencana with an unchanged fair value of RM1.50 a share based on a 30% discount to the group’s FY16F book value of RM2.14.
It said SapuraKencana has aborted the three conditional sales & purchase agreements (SPA) to acquire production assets from Petronas Carigali for US$400mil (RM1.7bil), which were signed on Nov 20, 2014.
The production assets include a 50% interest in the Petroleum Contract for Blocks 01/97 and 02/97 Cuu Long Basin, 40% interest in Blocks 10 & 11.1 Nam Con Son Basin and 36.8% in Block 46 Cai Nuoc, Malay-Tho Chu Basin.
Oil and gas production has started for the blocks in Cuu Long and Cao Nuoc Basins.
The completion of the proposed acquisition was conditional upon the receipt of consent from Petrovietnam and the Vietnamese government to the transaction.
It was also condition upon waivers from Petrovietnam and the contract partners for their preferential rights; execution and delivery of the relevant documentation and regulatory approvals.
“We are positive on this development given that crude oil prices are below US$30 a barrel while SapuraKencana has indicated that the breakeven level for its oil & gas production assets is above US$50 a barrel,” it said.
As the transaction includes paying a refundable 10% deposit upon signing of the agreements, AmInvestment expects negligible costs from the mutually consented termination.
Presently, the crude oil price outlook is uncertain given the current global oversupply exacerbated by the re-entry of Iranian production into global markets, the research house said.
As such, the group may not be able to secure favourable financing terms for new upstream developments under current conditions.
AmInvestment said SapuraKencana currently trades at a fair FY17F PE of 10 times as it expects losses from the group’s energy division and additional asset impairments due the low crude oil price environment.
“The group’s RM21bil current order book, which accounts for 2.2 times FY17F revenues, provides some earnings support over the next two to three years,” it said.
Quoting a report by oil and gas magazine Upstream, the research house said on Tuesday the contract was potentially worth up to US$300mil for Oil & Natural Gas Corporation’s Neelam processing platform and other facilities,
SapuraKencana's pipelay support vessel Sapura Onix at the IHC shipyard in 2015.
AmInvestment maintained its Hold call on SapuraKencana with an unchanged fair value of RM1.50 a share based on a 30% discount to the group’s FY16F book value of RM2.14.
It said SapuraKencana has aborted the three conditional sales & purchase agreements (SPA) to acquire production assets from Petronas Carigali for US$400mil (RM1.7bil), which were signed on Nov 20, 2014.
The production assets include a 50% interest in the Petroleum Contract for Blocks 01/97 and 02/97 Cuu Long Basin, 40% interest in Blocks 10 & 11.1 Nam Con Son Basin and 36.8% in Block 46 Cai Nuoc, Malay-Tho Chu Basin.
Oil and gas production has started for the blocks in Cuu Long and Cao Nuoc Basins.
The completion of the proposed acquisition was conditional upon the receipt of consent from Petrovietnam and the Vietnamese government to the transaction.
It was also condition upon waivers from Petrovietnam and the contract partners for their preferential rights; execution and delivery of the relevant documentation and regulatory approvals.
“We are positive on this development given that crude oil prices are below US$30 a barrel while SapuraKencana has indicated that the breakeven level for its oil & gas production assets is above US$50 a barrel,” it said.
As the transaction includes paying a refundable 10% deposit upon signing of the agreements, AmInvestment expects negligible costs from the mutually consented termination.
Presently, the crude oil price outlook is uncertain given the current global oversupply exacerbated by the re-entry of Iranian production into global markets, the research house said.
As such, the group may not be able to secure favourable financing terms for new upstream developments under current conditions.
AmInvestment said SapuraKencana currently trades at a fair FY17F PE of 10 times as it expects losses from the group’s energy division and additional asset impairments due the low crude oil price environment.
“The group’s RM21bil current order book, which accounts for 2.2 times FY17F revenues, provides some earnings support over the next two to three years,” it said.
thestar.com.my
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