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BIMBSec - Oil & Gas Sectors News Flash - 20120604

BIMBSec - Oil & Gas Sectors News Flash - 20120604

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Published by: Bimb Sec on Jun 04, 2012
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06/04/2012

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BIMB SECURITIES RESEARCH
MARKET INSIGHT
Monday, 4 June, 2012
PP16795/03/2013(031743)
 
| 1
News Flash 
Show Me The Contracts 
Chiong Tong Chai
 
 
03-26918887 ext 175
 
i.
 
Following news that Fred Olsen Production
’s
withdrawal from the Lam SoonFPSO contract, PetroVietnam Technical Services Corporation is reported tohave tied up with Yinson Holdings Berhad (Non-Rated) to probably take overthe contract. The final contract will involve converting a tanker supplied by
Vietnam’s PV Transportation into a FPSO plus using an APL turret mooring
system already purchased by Fred Olsen Production.Comments:
While it is speculated that the failure to secure the necessaryfinancing by Fred Olsen as the main reason for its pull out, it is also understoodthat local content requirements are also making the contract a tough challenge.Yinson is not new to
Vietnam’s O&G
scene as it is already operating 2 units of OSV with PetroVietnam more significantly is its 20 year bareboat charter for aFloating, Storage and Offloading charter contract worth USD331m withPetroVietnam where the vessel is scheduled for deployment by early 2013.
ii.
 
MMHE is reported as the front runner for an engineering procurement andconstruction (EPC) contract linked to the development of the F14 and F29discoveries in Block SK 308 located offshore Sarawak. The contract is likely toinclude the construction of a new drilling platform in F14 and modification tothe existing F23 gas production and processing complex. Output from F14 andF29 will be transported to the F23 complex for processing.Comments.
Currently detailed engineering for the F14 and F29 development areprogressing together with the D12 and Laila fields. Ramunia Holdings (Non-Rated) has recently announced that it has secured the Letter of Intent for thefabrication of D12DR-A and LADR-A substructures as well as D12DR-A and LADR-A topsides, both for the D12 and Laila fields with contract value estimated atRM150m. This is another good piece of news for MMHE as we reported lastweek that it is also in a forefront in securing an EPC contract in Turkmenistanthrough a joint bid. However, with no significant contract win so far this year andoutstanding orderbook of RM2.4bn, MMHE would need a very strong orderbookreplenishment by 2H12 to provide better FY13 earnings visibility. We expectboth contracts will likely to be awarded soonest by end of this year with earningscontribution to flow in 2013.
Our view.
We remain sanguine on the sector and expect continuous positivenewflows throughout 2012.
OVERWEIGHT
rating on the sector, maintain
Buy
on
BumiArmada (RM4.44), Dayang (RM2.43), Dialog (RM2.78)
and
Uzma (RM2.70)
,
TradingBuy
on
Wah Seong (RM2.28)
and
Sell
on
MMHE (RM4.37).
 

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