Carigali Hess Contract Boosts SapuraKencana Orderbook

SapuraKencana Petroleum Bhd (SapuraKencana) RM62 million contract win for the provision of subsea inspection services for Carigali-Hess Facilities from Carigali-Hess Operating Company Sdn Bhd via its wholly-owned unit Allied Marine and Equipment Sdn Bhd (AME) has been met with approval from analysts as the contract has ensured that the group’s orderbook remains strong.

 

In an announcement to Bursa Malaysia last week, SapuraKencana stated that the contract includes the inspection of Carigali Hess jackets, pipelines and floating storage and offloading vessel (FSO).

 

AME will also provide diving equipment, remotely operated vehicle (ROV), support vessel, personnel and inspecting/recording equipment as well as tools and spares required to perform the services and other work.

 

According to Aaron Tan Wei Min from the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), SapuraKencana’s orderbook remains strong at US$7.7 billion (approximately RM25 billion), with the tenderbook value being almost similar to the current orderbook.

 

Moving forward, he noted that SapuraKencana will be focusing more on the drilling equipment set (DES) and offshore construction and subsea services (OCSS) segments where margins are significantly higher and more value-added activities can be undertaken.

 

“In addition, the group is also looking at east two more Risk Service Contracts from Petroliam Nasional Bhd (Petronas).

 

“Channel checks indicated that the awards are likely to be announced in the first quarter of the current year 2014 (1Q14),” Tan added.

 

Overall, MIDF Research is bullish on SapuraKencana and thus maintained its ‘buy’ recommendation on the stock at a target price of RM4.86 per share, on the back of a forward price earnings ratio 15 (PER15) of 20-fold and earnings per share 2015 (EPS15) of 24.3sen.

 

“We like SapuraKencana for its integrated oil and gas business model, consistently strong orderbook replenishment (burn rate of three years) and its status as a strong beneficiary of Petronas’ strong capital expenditure (capex) spending for the next few years,” Tan explained.

Source: Borneo Post

SapuraKencana To Buy Newfield Assets for RM2.85bil

SapuraKencana Petroleum Bhd beat several other bidders including international oil companies to win the rights to buy Newfield International Holding Inc’s Malaysian oil and gas assets for a whopping US$898mil (RM2.85bil). It beat players like Exxon Mobil Corp, Royal Dutch Shell plc, Talisman Energy Inc and Kuwait Foreign Petroleum Exploration Co that had also put in their bids in the second round bids on Sept 26.

 

“This acquisition will further strengthen and diversify SapuraKencana group’s business portfolio and enable SapuraKencana to gain an immediate foothold and recognition as an upstream resource owner and operator,” said SapuraKencana president and group chief executive officer Tan Sri Shahril Shamsuddin.

 

Yesterday, SapuraKencana told Bursa Malaysia that it had entered into a conditional sale and purchase agreement with US-based Newfield International Holdings Inc to buy its Malaysian oil and gas assets. SapuraKencana said the deal would involve the company acquiring the entire stake in Newfield Malaysia Holding Inc.

 

The agreement is subject to the approval of national oil company Petroliam Nasional Bhd under the applicable production sharing contracts (PSC), SapuraKencana’s shareholders and other customary closing conditions.

 

“The profitable Newfield Malaysia business has an excellent HSE (health, safety and environmental) and operational track record backed by a strong execution team and cash-generating assets (about 23,000 barrels per day net production in 2012),” added Shahril.

 

SapuraKencana said it would finance the acquisition via a combination of internally generated funds and external bank borrowing.

 

In Malaysia, Newfield’s subsidiaries have interest in nine PSC blocks, spread between the Peninsular Malaysia’s oil producing region and the gas producing regions of Sabah and Sarawak. Its total Malaysian portfolio comprises 3.3 million net acres.

 

“In essence, we are acquiring a proven oil and gas operator with a balanced portfolio of producing and discovered fields and exploration assets in Peninsular Malaysia, Sabah and Sarawak.

 

“As a field owner and operator, this business will require different set of operating principles and as such we will manage this new business division separately as an independent subsidiary.

 

“We are confident that we will be able to grow the business further and provide a unique value proposition to our partners,” Shahril explained.

 

Under the proposed transaction, Newfield International would offer preferential rights to its partners to acquire the assets of Newfield Malaysia and its subsidiaries – Newfield Sabah Malaysia Inc, Newfield Peninsular Malaysia Inc and Newfield Sarawak Malaysia Inc.

 

In the event any of the PSC partners exercise their preferential rights for a particular asset, the allocated value for the respective asset would be reduced from the purchase price.

 

SapuraKencana said that barring unforeseen circumstances and subject to all required approvals being obtained, the proposed acquisition was expected to be completed in the first quarter of 2015.
 

Source: The Star

SapuraKencana Awaits Delivery of Seven New Vessels

SapuraKencana Petroleum Bhd (SapuraKencana) is set to be propelled into the pool of top offshore services providers in the world as it anticipates seven new vessels to be delivered within the next two years.

According to HwangDBS Vickers Research Sdn Bhd (HwangDBS Vickers) analyst, Quah He Wei, “We expect positive news flow for the company as it will be busy tendering for Petronas jobs in the coming few months.

“Contracts in the pipeline include Pan Malaysia hook-up commissioning jobs worth RM10 billion, inspection, repair and maintenance contracts worth RM800 million and fabrication projects worth more than RM3 billion.”

The analyst noted that all of the services were offered under SapuraKencana’s established integrated operations.

Quah also stated that the award of marginal fields contracts at Tembikai and Cenang, expected to be by the fourth quarter of 2012 could be a catalyst for the company. SapuraKencana has, year-to-date, secured RM3 billion new orders, thereby meeting the research house’s financial year 2013 (FY13) forecast.

“The full year impact of marginal field contribution in FY14 will be its immediate growth driver. The seven new vessels to be delivered within the next two years will expand SapuraKencana’s geographical coverage,” said Quah as he predicted the enlarged fleet would turn the company into one of the top offshore services providers in the world.

Being the only integrated oil and gas (O&G) player in Malaysia that offers full spectrum of services across the industry value chain, coupled with its solid partnerships with global players such as Seadrill, Subsea7 and L&T, SapuraKencana is believed to be the top contender to bag major contracts.

“Its maiden foray into Brazil with its US$1.4 billion pipelay vessel charter contracted secured in November marks the beginning of its aggressive global expansion,” said the HwangDBS Vickers analyst.

Quah believed that should long-time partner, Seadrill’s initial public offering plan materialised, SapuraKencana’s Brazilian venture could be a catalyst as the 50:50 joint venture might be injected into the listed entity.

The analyst was positive on the resilient earnings that the O&G company derived from long-term drilling and installation contracts. This was believed to make SapuraKencana less susceptible to oil price volatility.

“Given its unrivalled ownership of quality assets, SapuraKencana is poised to be the leading O&G player, not only in Malaysia, but also in the region, going forward,” he explained.

As such, he went on to cut FY13 forecasted earnings by 21 per cent after stripping out Kencana’s fabrication contribution for January to May 2012 as the merger was completed in late May. Quah pegged target price of RM2.70 per share for the company implying 15 per cent upside potential.

“SapuraKencana remains the cheapest large-cap O&G stock in Malaysia at 16 times FY14 earnings per share, despite boasting the largest RM14.3 billion orderbook and unrivalled integrated services under its belt,” he added.