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In line with our expectation of robust corporate activitieswithin the domestic O&G segment, Dialog announced aMoU with global oilfield titan Halliburton, to jointlycooperate in pursuing job opportunities to re-developmature oilfields in Malaysia. We see this a positive movefor Dialog in beefing up its upstream execution capabilitieswhich could also bring along not only jobs related tooilfield re-development but over a longer term serve as agood platform for the Group to move into independent oilplayer league. No change in forecast and target price of RM2.78.Robust corporate activities.
A combination by local playerson the need to improve their technical/servicecapabilities/offering suite and foreign players attracted by
Petronas’ massive 5 year capex have created robust
corporate exercise within domestic O&G segment YTD,which we have anticipated earlier on. We expect the trendwill continue for a foreseeable future as more jobs areexpected which usually entails
content/participation requirements. We view positively as away to transform domestic players onto internationalleague.
Supportive demand background.
With about 60% of
Petronas’ domestic producing fields have been producing
for 19-28 years, production in these fields may already be ina production plateau or even moved into a stage of declining production. As such, we see a natural demand forextension of the economic producing life of these affectedoilfields via various re-development techniques.
Strong partner = Better chance.
Halliburton is one of thebig names in the global oilfield services
Dialog’s ability to secure such a big player as its partner can
be seen as a strong testimony on its track records and webelieve that jobs winning chances for the JV would be good.
No change in forecast.
We made no change in our forecast.
View & Valuation
. We continue to favour the stock for itsstrong delivery track record and continue to see thecompany as one of the strong contenders for additional risksharing contracts from Petronas which certainly would helpboost its existing strong recurring earnings profile. Maintainour
call at SOP target price of