Perisai to ride on expanding hydrocarbon drilling activities
Posted on July 19, 2012, Thursday
KUCHING: Drilling activities in Malaysia are likely to remain robust given the increasingly challenging field exploration to discover new hydrocarbon resources.
According to HWANGDBS Vickers Research Sdn Bhd (HwangDBS Vickers), this was a niche market with growth potential as foreign substitution could play a major role in sweeping drilling contracts for local rig owners that meet the requirements.
It also implied a strong chance for Perisai Petroleum Teknologi Bhd (Perisai) to clinching a contract for its maiden US$208 million jack-up rig which would be delivered by July 2014.
Going forward, Perisai was expected to focus on production and drilling. Its flagship mobile offshore production unit (MOPU) was working for Petronas Carigali Sdn Bhd under long-term contract until September 2013 but might be extended by a year.
“Securing contracts for its MOPU upon expiry should not be an issue given the MOPU’s versatility and mobility, as well as relatively lower operating costs,” said the research firm.
HwangDBS Vickers predicted that the company might not require a rights issue to fund the remaining 80 per cent of the cost of the first rig. The 20 per cent upfront payment was funded partly by borrowings which, the research firm had included in its model.
In addition, the management was considering its option to order a second rig which would expired by February 2013.
Should the management proceeded with the plan, a rights issue could be inevitable as the company might not be able to fund two rigs at the same time. According to the management, there were 25 rigs working in Malaysian waters, mostly foreign-owned.
Net gearing for the company was expected to rise to 102 per cent in financial year 2012 (FY12) before improving to 63 per cent by FY13, premised on strong cash flows from MOPU chartering.
On the other note, Perisai might be able to participate in EOC Ltd’s floating production storage and offloading (FPSO) at Petronas-Hess’ US$5.2 billion North Malay basin development where the gas floater Lewek Arunothai would undergo modification to meet 1Q13 first gas production timeline.
Ezra Holdings Ltd (Ezra) has 24 per cent stake in Perisai currently. This would be reduced to 16 per cent after Perisai’s managing director completes the exercise of his option. As such HwangDBS Vickers noted that Ezra might want to inject the FPSO into Perisai in return for new shares to raise its stake again.
HwangDBS Vickers expected 13 per cent earnings boost by FY14 for 4Q14 contribution before realising full-year earnings impact of as much as 44 per cent earnings growth in FY15. It went on to peg a fair value of RM1.20 per share for the company.