KUALA LUMPUR: Maybank Investment Bank Research maintains its “sell” call on Perisai Petroleum Teknologi Bhd even though the oil and gas player had secured a US$26.9mil farm out contract.
The research house had anticipated lower daily charter rates.
To recap, Perisai’s 51%-owned unit has just signed an agreement with Petronas Carigali Sdn Bhd to farm out its jack-up rig Perisai Pacific 101 (PP 101) to Hess Exploration and Production Malaysia BV (Hess) for nine months.
Daily charter rate for PP 101 was at US$99,000 while the agreement comes with an option to extend for another month.
“While the daily charter rate would see Perisai registering negative profit and loss for the duration of the farm out period, the contract will be cashflow positive.
“It is inevitable that jack up operators such as Perisai concede to lower daily charter rates in the current environment, to optimise utilisation, and to sustain cashflows and repay borrowings,” said the research house.
Maybank Research has an unchanged target price of 25 sen based on 7 times 2016 price-to-earnings ratio.
“PP101 will be reassigned to Petronas Carigali once the farm out contract is over,” Maybank IB Research added.
In comparison, PP 101 was earlier awarded a three-year firm charter by Petronas Carigali for US$158mil or at a daily charter rate of US$144,000, which commenced operations in June 2014 before the contract was renegotiated with a lower rate effective this April.
The research house opined that the daily charter rate of US$99,000 was in-line with the market rates that range between US$90,000 and US$110,000.
It had reduced its jack up daily charter rate assumption to US$95,000.
“With such unfavourable conditions, we do not rule out Perisai further delaying the delivery of its second jack up rig Pacific 102 beyond December.”
The research house said its concerns were of Perisai’s high operating leverage and its off-hire assets since Sep 2013, which were unlikely to secure charters soon.
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