SapuraKencana rises on gas discovery offshore Sarawak
KUCHING: Shares of SapuraKencana Petroleum Bhd (SapuraKencana) rose to a high of RM4.05 in morning trade yesterday on its four gas discoveries offshore Sarawak.
At closing, the price was RM4.04, a rise of five sen or 1.25 per cent. There were 14.61 million shares traded yesterday.
Analysts were optimistic on the group’s prospects following the discoveries as it would sustain earnings for its upstream division.
Analyst Arhnue Tan from AllianceDBS Research Sdn Bhd (AllianceDBS Research) said the gas discoveries are positive as it ensures continuous recurring income from their upstream investments.
“Currently, the group only produces crude oil at a rate of 20,000 to 25,000 barrels a day and oil reserves are running low with development drilling consistently required,” she said in a report yesterday.
“Earnings potential from the new gas discoveries is unclear at this early stage and the group will be carrying out more field assessments and complete its drilling programme before any estimates can be offered.”
To note, there are six more wells to be drilled at SK408.
“We estimate a 24- 30 month time lag or more, before production from these new discoveries
Currently, the group only produces crude oil at a rate of 20,000 to 25,000 barrels a day and oil reserves are running low with development drilling consistently required.
Arhnue Tan, AllianceDBS Research analyst
can commence,” Tan added.
Meanwhile, researchers at Maybank Investment Bank Bhd ( Maybank Research) said this development reflects the quality field assets from its Newfield Malaysia acquisition.
“While the field is considered 2C for now, the likelihood of a 2P status upgrade will materialise once it signs the Gas Sale Agreement with Petroliam Nasional Bhd (Petronas) parties by end-14.
“This would be a significant milestone to monetise the unexplored natural gas fields by 2017 or 2018, sustain daily production of 21,000 to 23,000 barrel oil equivalent ( boe) and uplift its prospect and sentiment.”
The announcement was on the back of SapuraKencana management, headed by president and group chief executive officer Tan Sri Shahril Shamsuddin presenting during Invest Malaysia 2014 on Monday.
“We are encouraged that SapuraKencana is aggressively capitalising on Petronas’s and Petrobras’s massive capex programmes and the potential growth offered by the sector in Malaysia and Brazil, which make up a respective 27 per cent and 49 per cent of the sector-beating RM25.8 billion order book,” said analysts with CIMB Investment Bank Bhd (CIMB Research) on this note.