Tuesday 18 Jun 2024
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KUALA LUMPUR (Jan 8): Securing the Jerun central processing platform (CPP) job could boost Sapura Energy Bhd's outstanding order book of RM12.5 billion by 32%, reversing its declining sequential trend over the past two quarters, said AmInvestment Bank.

The research house’s analyst Alex Goh said today he estimated that the contract value of a CPP weighing 22,000 tonnes, plus 5,300 tonnes of piles and an 8,500-tonne compression platform, could easily be worth over US$1 billion (RM4.04 billion).

Citing a report from energy portal Upstream, Goh said Sapura Energy is expected to secure the engineering, procurement, construction, installation and commissioning (EPCIC) contract for a CPP for SapuraOMV Upstream Sdn Bhd’s Jerun field development off Sarawak.

It was noted that there were only two bidders for the Jerun CPP, namely Sapura Energy and Malaysia Marine and Heavy Engineering Holdings Bhd (MHB).

Even though the report indicated that the decision is likely to be made based on Sapura Energy’s bid instead of its ties to the operator, MHB’s commercial bid was lower, said Goh.

Thus, citing Upstream, he said MHB is still hopeful of securing the contract, which is expected to be formally awarded by the end of the month.

According to Goh, the Jerun field, together with the Jeremin, Teja and Legundi satellite discoveries, forms Phase 2 of the Block SK 408 development.

Partners in the Block SK 408 production sharing contract are operator SapuraOMV (with a 40% stake), Petronas Carigali Sdn Bhd (30%) and Sarawak Shell Bhd (30%). OMV, the Austrian energy giant with a 50% shareholding in SapuraOMV, earlier indicated that the Jerun field is due to come on stream in 2024.

Goh also noted that water depths of the offshore block, located 130km north-west off Miri, Sarawak, range from 80m to 90m, and the Jerun development will have six wells with total production of around 600 million cubic feet per day of gas.

Meanwhile, Goh expects eight greenfield and 30 brownfield field development projects to be sanctioned over the next 36 months.

He added that for this year alone, domestic bids could be opened for another CPP in excess of 7,500 tonnes, five wellhead platforms weighing between 1,000 and 7,500 tonnes and one “light” wellhead platform below 1,000 tonnes.

“This underpins our view that Sapura’s order book momentum is set for a transformative turnaround with the group bidding for a massive RM38.8 billion (+32% quarter-on-quarter) in new jobs besides even larger prospective projects worth RM68 billion amid the brightening outlook in an upstream capex (capital expenditure) upcycle.

“Against the backdrop of improving prospects of new jobs across the globe and underpinned by a soon-to-be revitalised RM10 billion debt structure by the end of this month, the stock currently trades at an undeserved fire-sale 0.2 times P/BV (price-to-book value),” he said.

Goh maintained his "buy" recommendation for Sapura Energy with an unchanged fair value (FV) of 29 sen a share, pegged at a 50% discount to the group’s book value forecasted for the financial year ending Jan 31, 2021 (FY21).

At 10.01am today, Sapura Energy was unchanged at 12.5 sen, valuing the company at RM1.92 billion.

Edited BySurin Murugiah
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