Sapurakencana Petroleum - Lands Two More Contracts

THE BUZZ  

SapuraKencana Petroleum (SKPETRO) announced on Bursa Malaysia yesterday that it was awarded with two contracts: i) the provision of underwater services worth RM700m from  Petronas  Carigali,  and  ii)  the  provision  of  engineering,  procurement,  construction and  commissioning  (EPCC)  worth  RM135.8m  from  Hess  Exploration  and  Production Malaysia.

OUR TAKE  

RM700m  Petronas  Carigali  deal.  The  contract  comprises  the  provision  of  underwater services,  including  inspection,  repair  and  maintenance  services.  SKPETRO  would  be utilising specialised vessels, equipments and personnel  for Petronas Carigali's offshore
oil  and  gas  fields  in  Malaysia.  The  duration  of  the  contract  is  three  and  a  half  years, effective from Oct 2012 until Apr 2016, with an extension option for one additional year.

RM135.8m Hess Exploration and Production Malaysia deal. The contract comprises the  provision  of  engineering,  procurement,  construction  and  commissioning  (EPCC)  of Kamelia-A  Wellhead  Platform  for  an  early  production  system  of  the  integrated  gas development project in the North Malay Basin. The project is expected to be completed by 1Q13.
 
Nudging  up  FY14  earnings  by  4.1%.  With  the  two  contracts  in  the  bag,  SKPETRO would  have  an  orderbook  of  some  RM15bn-RM16bn.  We  are  revising  our  FY14 earnings forecast upwards by 4.1% in anticipation of more contract awards for the group
in the near term. That said, we opine that there could be further upside to our earnings forecasts  should  the  group’s  marginal  oilfield  in  Berantai  begin  contributing  to  its bottomline in FY14.
 
Maintain BUY. All in, we remain positive on SKPETRO's prospects moving forward and expect the group to secure more jobs in the near term. Its orderbook remains the best in the  oil  and  gas  industry  (estimated  at  some  RM15bn-RM16bn  with  the  addition  of  the
new  contracts),  with  consistent  replenishment  expected.  In  line  with  our  earnings forecast revision, our fair value is revised upwards from RM2.88 to RM3.00, pegged to an existing 20x FY14 EPS.

Source: OSK