Semenanjung-owned SapuraKencana to get Samarang CPP contract in Sabah from Petronas

 Shahril Samsudin, Kencana Executive Chairman

 Mokhzani Mahathir, substantial shareholder of SapuraKencana

Datuk Seri Shamsul Abbas, President and CEO of Petronas

Saturday January 12, 2013

SapuraKencana likely to win Samarang CPP contract

By NG BEI SHAN
beishan@thestar.com.my

PETALING JAYA: SapuraKencana Petroleum Bhd has started the ball rolling on the 10 central processing platform (CPP) contracts it is eyeing for this year.

This comes on the heels of reports that the oil and gas (O&G) heavyweight was “well-placed” to clinch the Samarang CPP project fromPetroliam Nasional Bhd (Petronas).

A prominent O&G publication has reported that SapuraKencana was well-positioned to secure the turnkey project, which would involve the construction and installation of a CPP. The CPP, with a 10,000 deck, is likely to come equipped with gas compression and water injection modules, with an expected completion date of 2015.

An analyst with UOB KayHian Research said: “This kind of unit ranges from RM1.2bil to RM2.7bil.”

He said the news did not come as a surprise, as analysts covering the country's largest oilfield services provider by market capitalisation had factored in RM3bil to RM5bil of contracts for the year.

“If it secures the project, slightly more than RM1bil might be added to its order book,” another analyst said, adding that he expected many more projects to flow in since it was only the beginning stages of the year.

In a recent note, AmResearch analyst Alex Goh said: “This new contract is part of the 10 CPP contracts that SapuraKencana is eyeing this year, as well as other multiple platform projects.

“The group's tenderbook of RM30bil currently includes bids of RM11bil that have been submitted, including the five new Petrobras pipelay or diving support vessels.”

Samarang is a mature oilfield off Sabah and the contract involves engineering, procurement, construction and commissioning for a CPP.

He said: “A hook-up and commissioning contract awarded to SapuraKencana is understood to be tied to modification work on the existing platforms.”

According to the report, the CPP is among the new facilities planned under the phased re-development of the mature oilfield. Petronas took over the shallow reef discovery in 1995 from Shell, 20 years after it was brought into production.

He also said the phased Samarang re-development was aimed at doubling the field output by lifting its oil recovery rate from 41% to 51% and expected the oilfield's production life to be extended by another 15 years.

Meanwhile, Goh was also positive on its US$2.9bil rig acquisition fromSeadrill, comprising 10 tender-assisted rigs (TAGs) plus a 49% stake each in five TAGs and five TAGs under construction.

With the deal, SapuraKencana would emerge as a leader in the global tender rig business, controlling more than 50% of the market.

AmResearch maintains a “buy” call on the counter with an unchanged fair value of RM3.70 per share. Data from Bloomberg showed that most analysts have given it a “buy” recommendation, with a consensus 12-month price target of RM3.42. The stock closed unchanged at RM3 with 9.7 million shares changing hands yesterday.

Ringgit continue to appreciate against US dollar

Ringgit expected to hit RM2.95 by year-end

Posted on January 10, 2013, Thursday

KUALA LUMPUR: The ringgit is expected to appreciate to RM2.95 against the US dollar by year-end on expectation that Malaysia’s international reserves will continue to improve.

HIGH VALUE: Economists expect the ringgit to appreciate to RM2.95 against the US dollar by year-end 2013 on expectation that Malaysia’s international reserves will continue to improve.

The currency closed at RM3.05 per dollar last year.

Expressing optimism, Alliance Research economist Manokaran Mottain said international reserves could hit US$150 billion by end-2013.

Bank Negara Malaysia (BNM) international reserves ended the year at US$139.7 billion on December 31, 2012 against US$139.2 billion recorded on December 14, 2012.

Manokaran said the increase was largely attributed to continued inflow of foreign direct investment and portfolio funds into the economy, given the favourable positive interest rate differential, which stood at a record 290 basis points.

“On the other hand, resilient economic outlook and steady interest rate expectations could have also contributed to increased foreign investors’ participation, especially in the bond market,” he said in a note yesterday.

Manokaran said reserves also rose due to surpluses from export activities over the last three months.

“As a result of increasing funds flowing into the system, we estimate excess liquidity in the banking system to remains abundant at about RM295 billion on December 31,” he said.

Meanwhile, RAM Holdings Bhd (RAM) group chief economist Dr Yeah Kim Leng said international reserves would continue to increase at a steady pace this year, underpinned by both direct and foreign capital inflow, as well as, continuous trade surpluses.

“The international reserves is at healthy level and it will strengthen the currency market,” he told Bernama.

High international reserves was one factor that would underpin the strength of ringgit, said Yeah, adding that the local unit was likely to hover between RM2.90 and RM2.95 over the next 11 months.