Limelight now on Sapura E&P

PETALING JAYA: With crude oil prices now trading above US$75 (RM298.50) a barrel, the limelight has returned to Sapura Energy Bhd’s exploration and production (E&P) operations, with its proposed listing becoming more likely, according to AmInvestment Bank.
The research house added that this will reinvigorate the group’s overall re-rating process.
AmInvestment Bank is maintaining a “buy” call on Sapura with an unchanged fair value of RM1 a share.
On Monday, Sapura and its partners Sarawak Shell and Petronas Carigali made its ninth gas discovery offshore Sarawak in the Pepulut-1 exploration well, which encountered a high quality reservoir, following the completion of its 2017 drilling campaign within the SK408 production sharing contract (PSC).
Sapura E&P is the development and production operator with a 40% working interest in the SK408 development. The estimated reserve for Pepulut has not been revealed yet.
“Given that this field is in the vicinity of the Gorek, Larak and Bakong fields of phase 1 in the SK408 PSC, which achieved final investment decision in April this year, we expect this discovery to further enhance the viability of this project cluster by leveraging on the common infrastructure, pipelines and facilities,” AmInvestment Bank said.
As the first three fields will be developed as three separate wellhead platforms tied back to the existing processing facility and to the MLNG complex in Bintulu, it expects Sapura’s fabrication yard utilisation to improve significantly towards the end of the year.
The group already secured two Hess wellhead platforms and the Pegaga central processing platform from Mubadala Petroleum.
The research house said E&P’s FY20 production is expected to fall by 12% year-on-year from natural decline. However, the Gorek, Larak and Bakong gas fields in the US$200 million Phase 1 of the SK408 PSC are targeted to commence production in FY21, radically transforming annual gas output from 2 million barrels of oil equivalent (boe) to 12 million boe and propel overall hydrocarbon production to 13.4 million boe, up 3.8 times from 3.5 million in FY18.
The fields under the SK408 gas field development project, which have an estimated reserve of 2.8 trillion cu ft of gas, are part of the discoveries made by Sapura E&P in its 2014 drilling campaign.
The SK408 gas fields will be Sapura E&P’s second major upstream gas development project in East Malaysia, after the successful development and commencement of production from the group’s 30%-owned SK310 B15 gas field late last year.
Sapura’s share price closed 3 sen or 4.7% higher at 66.5 sen today on some 343.34 million shares traded.