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Thursday, May 15, 2014

Maybank Research retains Overweight on oil and gas sector


KUALA LUMPUR: Maybank Investment Bank Research is maintaining its Overweight call on the oil and gas sector and its top picks are Dialog GroupPerdana Petroleum,SapuraKencana PetroleumPerisai Petroleum and Yinson.
It said on Wednesday these companies had exposures in the Refinery and Petrochemical Integrated Development  (RAPID), offshore support vessels (OSV), Malaysia exploration and production (E&P), offshore drilling and  floating production, storage and offloading (FPSO).
Maybank Research said on the demand for jack-up (JU) drilling rigs, it was bullish onUMW Oil and Gas (UMW-OG) while prospects seem to be strong in the Southeast Asian (SEA) region.
The main new markets were Myanmar and the Philippines whereas Vietnam, Thailand and Malaysia were enhancing their E&P activities.
The research house pointed out that for the short-to-medium term, UMW-OG'S target was to optimise day rates and utilisation.
However, for long term from 2016 onwards, it would be to grow its jack-up fleet size by one new JU per annum while keeping its balance sheet discipline. 
UMW-OG's target is to strengthen its market leadership in Malaysia and expand its operations in the APAC region.
For SKPetro, the research house said 2014 would be a productive year as the assimilation of Newfield Malaysia is completed.
It added SKPetro would enhance its recovery at the producing fields in Peninsular Malaysia as well as explore wells at Block SK310 and SK 408 fields.   The former field is expected to attain its first production by 2017.
The research house expects that the first upstream gas sale agreement will be signed by end of 2014.
"The FPSO market is entering a more balanced state, with more acceptable contracts, risks and returns for FPSO operators and oil companies," it said.
The research house expects the oil and gas market to remain optimistic over the next three years due to consistent flow of contacts.
"Companies with sound financials will ride on the prospect but many will likely fall out on Shariah compliance aspect," it said.

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