SAPCRES, KENCANA & Petrofac in JV to develop Berantai oil field

• SAPCRES, KENCANA and Petrofac Energy Developments, a unit of London-listed Petrofac, has entered into a JV to develop and operate the Berantai field located 150km offshore Terengganu.
• The interest of each Operating Party under the JOA is as follows:

1. Sapura Energy Ventures - 25%
2. Kencana Energy - 25%
3. PED - 50%

• A risk service contract (RSC) was signed by Petronas and the operating parties. The contract would be for 9 years commencing Jan 31, 2011 with first gas from the project expected by the end of Dec 2011.
• Under the agreement, the operating parties would provide 1 well-head platform with 18 wells (expected to be completed by end-2012) together with related pipeline linking it to another existing platform and the provision of a floating production, storage and off-loading vessel (FPSO).
• The operating parties would also have the right to deploy works and services to the project while a second well-head platform would be installed in a subsequent phase.
• The total development cost including for the subsequent phase, to be incurred collectively by the operating parties, was estimated at this juncture at approximately US$800 million excluding the provision of the FPSO.
• The RSC from the JV are  expected to have a positive impact on the net asset, net asset per share and earnings per share of the companies involved.
• KENCANA target price RM3.05

KENCANA gets RM398million via private placement

• Private placement of 166.7 million shares of 10 sen each via book-building exercise has been completed in gross proceeds of about RM397.6mill. Oversubscribed by 3.5 times.
• Believed the fund-raising exercise would be invested in the company's local marginal fields.
• PM Najib on Jan2011 announced billions of ringgit worth of investment in the oil and gas industry to enhance oil extraction from marginal fields.
• It is widely speculated that KENCANA & SAPCRES to be the local frontrunners for the marginal fields developments.
• Petronas will unveil a new business model on the development of marginal oil fields & local players are expected to JV with more experienced foreign partners.

SAPCRES secured USD31.8mill deal from Petronas

• The offshore works are expected to commence between October to November 2011 and run for a duration of 40 days.
• Project to install offshore facilities in the Andaman Sea.

Oil & Gas Sector (Overweight)

• Higher activity in the oil and gas industry in Malaysia, in particular the offshore segment where most marginal oil can be found.
• In 2009, Petronas discovered one new offshore shallow water oil field PAUS in Sarawak and one new gas field Sepat Barat off Peninsular Malaysia. Total number of producing fields in Malaysia has reached 104 (out of which 68 are oil fields and the rest gas fields), up from 88 in 2008. 
• According to industry sources, Petronas is expected to increase E&P spending from last year 2009 RM28bill to RM43bill by 2012, mainly driven by higher deep water exploration (off Sabah blocks) and drilling activities. This represents a 4-year CAGR of 8%.

1. Sabah Oil and Gas Terminal
2. Dialog and its partner have been awarded in Oct 2010 the exclusivity to develop an independent deep water petroleum terminal at Pengerang for a period of 60 years.
3. Tanjung Agas Pekan
4. M&A: MHB, Kencana, etc.
5. Batu Pahat - Pontian - Iskandar --> PetroChemical Traingle. Funding - Malayan.....

• Beneficiary counters: MHB, KENCANA, PETRA, DAYANG, DIALOG, SAPCRES, KNM.