Uzma stated that the two three-year contacts were for the provision of integrated production and integrity chemical and associated services for Malikai Stage 1 and Gumusut Kakap.
KUCHING (March 23): Uzma Bhd’s (Uzma) is expected to ride on brighter prospects after its 70 per cent owned subsidiary Malaysian Energy Chemical & Services Sdn Bhd (MECAS) secured two contracts worth RM68.1 million from Sabah Shell Petroleum Co Ltd (Sabah Shell).
In a filing with Bursa Malaysia yesterday, Uzma stated that the two three-year contacts were for the provision of integrated production and integrity chemical and associated services for Malikai Stage 1 and Gumusut Kakap.
According to analysts with Public Investment Bank Bhd (Public IB Research), the two contracts will keep the firm’s orderbook for its oil and gas (O&G) segment healthy at RM2 billion.
Additionally, the two wins also represent a second win for the year from Shell and demonstrate their confidence in Uzma’s capabilities.
Assuming equal revenue recognition through the duration of Public Investment’s assumed blended profit after tax and minority interest (Patami) margin of 7.1 per cent, the analyst opines that the contract win is expected to contribute about RM1.6 million or +3.8 per cent per annum to the firm’s Patami from financial year 2023 (FY23) onwards.
Looking ahead, Public IB Research believed that the current Brent crude oil price volatility is still manageable and will not cause a roll back in industry player capital expenditure (capex) plans in 2023.
“Capex by major oil players typically lag oil price trends to allow producers to build up cash reserves while remaining prudent on expenditure. In 2022, most players reaped the benefits of a US$100 per barrel environment,” it explained.
“Thus, we reaffirm our optimistic outlook on Uzma as a key beneficiary of increasing brownfield activities especially on production enhancement and decommissioning activities,” the analyst concluded.
Public Investment maintains their outperform rating on Uzma with a 12-month target price of RM1.05 per share.