HBP had on 7 Nov 2012 entered into an OSC with Petronas
Carigali Sdn Bhd as an independent technical service contractor to provide
Contractor Services required to enhance the recoverable reserves from the Bayan
Field offshore of Bintulu. The estimated total project value is USD1.2b with a
term period of 24 years.
Comments This came as no surprises as Dialog and Halliburton
had earlier signed a MoU in June to explore opportunities in the redevelopment
of mature oil fields in Malaysia.
This is positive for Dialog as it helps it to move up the
value chain in its involvement in upstream oil & gas activities. Bayan OSC
is the company’s second upstream projects after Balai RSC.
In the initial stage, both Dialog D&P and AES will subscribe
for a total of RM2.5m equity stake each in HBP. However, the eventual equity participation
in HBP will be determined later.
Dialog will equity account for this venture as it is a 50:50
jointly owned entity.
HBP will share the incremental oil & gas production
profit from the enhancement of the recoverable reserves. However, the USD1.2b capex
is not guaranteed to be reimbursed like the marginal oilfield contracts.
Outlook This OSC will create a robust platform
for generating long term (i.e., 24 years) sustainable revenue from its
incremental oil & gas production.
Forecast We
are keeping FY13E-FY14E estimates for now pending further updates from
management.
Rating Maintain OUTPERFORM
Valuation Our
new SOP-driven price target of RM2.79/share is maintained.
Risks The USD1.2b capex for this OSC, or
USD600m capex at Dialog’s end, is not guaranteed to be reimbursed like the RSC.
Source: Kenanga
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