Petra Energy - A New AHTS In Sight

Petra Energy reported on Bursa Malaysia yesterday that it entered into a conditional share sale agreement with Shorefield Offshore Services SB to acquire 200,000 ordinary shares in KAS Ship Management SB (KAS), representing 100% equity interest in KAS for a total purchase consideration of RM3m.

Buying a AHTS for its marginal oilfield project.

KAS has a wholly-owned subsidiary named KAS Marine that is principally involved in the provision of offshore support vessel leasing. Its principal asset is KAS Marine 1, an anchor handling tug supply vessel that is already servicing a time charter contract from InOilCo Safety Consultant SB (pursuant to InOilCo’s main charter contract with Murphy Sarawak Oil) for the period of five years from 24 April 2009 to 23 April 2014. The contract has two renewal options of two years each, at Murphy Oil’s discretion.

A positive move, but we make no changes to our forecasts.

As Petra Energy is purchasing the company for a mere RM3m, the impact to its balance sheet is minimal as the company has ample cash and cash reserves (as at 3Q2012, the company has cash and bank balances of RM67m). If the deal goes through, the impact to its profit and loss statement will be positive as the company made RM3m in 2011. We have already factored in a buffer for such events in our earnings forecast in 2013, and as such, make no changes to it.

Maintain BUY.

All in, we are making no changes to our recommendation. We value the stock at RM1.94, pegged to the existing 14x FY13 PE. Key rerating catalysts for the stock include: i) the securing of major contracts under Pan Malaysia tenders, and ii) the securing of an enhanced oil recovery project which strengthens its upstream venture.

Source: OSK