SKP well-positioned for big O&G jobs

SapuraKencana Petroleum Bhd (SKP) will be well-positioned to target large-scale and lucrative oil and gas projects in and outside Malaysia given the recent acquisition of Quippo Prakash Marine Holdings Pte Ltd (QP), says OSK Research.

SKP's wholly-owned subsidiary, Geomark Sdn Bhd, had entered into a share sale agreement with QP, MDL Energy Pvt Ltd, Quippo Oil and Gas Infrastructure Ltd to acquire 74,000 ordinary shares of SGD1.00 each in QP, equivalent to 74 per cent of the issued and paid-up capital of QP, for US$22.5 million.

"We like the merged entity for being a full-fledged engineering, procurement, construction, installation and commissioning O&G provider.

"As a one-stop solution provider, SKP will be able to take on the role of main contractor and hence reap higher project margins as it is likely to be awarded entire contracts rather than given piecemeal jobs," it said in a research note.

OSK said the acquisition would enable SKP to gain full control of QP's vessels in order to better manage the latter's operational schedules and costs.

Going forward, OSK thinks there are still many opportunities for SKP to beef up its orderbook further in the coming months, especially from Petronas which should also be increasing its local exploration and production capital expenditure to temporarily substitute the loss of production from its Sudan operation.

As of May 2012, SKP held an orderbook of close to RM14.3 billion with more than 50 per cent constituting international contracts. Its current tenderbook is around RM7 billion.

Echoing the same view, MIDF Research said it is a good strategic and tactical move by SKP as they would have more autonomy and control to utilise QP 2000 (a derrick lay barge, one of the largest of its kind in the South Asian region).

"As QP 2000 has shallow-water and deep-sea capabilities, SKP will have an added edge over other players in the South East Asian region where the average age for similar ships in this region is over 25 years old," it added. Both research houses maintained a buy view for SKP. -- Bernama