KUALA LUMPUR (Dec 22): Shares in Coastal Contracts Bhd (KL:COASTAL) surged nearly 20% on Monday after a consortium led by its joint venture (JV) secured a major gas processing contract from Mexico’s national oil and gas (O&G) firm, Petroleos Mexicanos (Pemex).

The contract, valued at RM4.64 billion, was secured by a consortium led by its 50%-owned JV Coastoil Dynamic SA De CV on Dec 19, according to Coastal Contract’s exchange filing on Monday.

The consortium also comprised Mexican firms Sistemas Integrales De Compresion SA De CV and Nuvoil SA De CV. Coastal Dynamic’s effective financial interest in the contract is 100%, as per the consortium agreement, the company noted.  

Post-contract win, the counter rose as much as 19.7% to RM1.46 on Monday. It later ended the day at RM1.42, still up 20 sen or 16.4%, valuing the company at RM793.7 million.

The contract represents an expansion in its JV’s role in Mexico’s Ixachi field, currently anchored by the Perdiz and Papan gas processing plants.

Under the new contract, the consortium is set to build a second Papan plant and provide gas sweetening services for an eight-year and 10-month period, together valued at RM1.84 billion.

Provision of related permanent infrastructure for RM694 million, a separation plant for RM1.88 billion, and a condensate pipeline for RM229 million, brings the contract’s total value to RM4.64 billion.

“Following this contract win, Coastal Dynamic’s total gas processing capacity will increase to 680 million standard cubic feet per day (mmscfd), comprising 180 mmscfd from the Perdiz plant, which is contracted to operate until December 2027, 350 mmscfd from existing Papan plant contracted through October 2032 and 150 mmscfd from the second Papan plant, which is contracted to operate for a period of eight years and 10 months until August 2035,” the company said.

The new contract brings the JV's total order book to RM7.4 billion, providing “strong revenue visibility and earnings sustainability until August 2035”, it added.

Looking ahead, Coastal Contracts notes the potential for further expansion of gas processing capacity at the Ixachi field.

Citing the field’s projected peak gas production of over 1,000 mmscfd, expected to be reached in coming years, “potential for further capacity expansion” may be required given current processing capacity of 680 mmscfd, the company said.

“In this regard, the Perdiz plant presents additional growth opportunities, with its existing contract scheduled to expire on Dec 31, 2027,” it noted.