KUALA LUMPUR: The new gas discoveries from SK408 field are sizeable at three trillion cubic feet (3tcf) and they will lift SapuraKencana Petroleum’s (SapKen) reserves portfolio by 50%, which is a major positive catalyst.
Maybank Investment Bank Research said on Wednesday said SapKen's move to unlock and monetise its gas reserves via the signing of gas sales agreement soon is a re-rating catalyst and this has not been factored in by the market yet.
Reiterating a buy call on the stock with an unchanged sum-of-parts derived target price of RM2, it added it was maintaining its earnings estimates for now.
SapKen has made significant gas discovery from its three-well 2015 drilling campaign within the Block SK408 Production Sharing Contract (PSC) area offshore Malaysia.
The additional gas reserves are estimated to be about 3tcf, which would lift its reserves by 50% to 9tcf, it said.
Maybank Research said that it was a major positive development as SapKen has the accolade of having the largest gas holdings in Malaysia.
The company is the exploration explorer with a 40% working interest, with partners Petronas Carigali Sdn Bhd (30%) and Sarawak Shell Bhd (30%) holding the remaining interest. Unlocking value from its existing gas fields/reserves is high on its agenda, the research outfit said. SAKP has secured a Field Development Plan approval from Petronas for its SK10 B15 field.
Signing of the gas sales agreement would enable SapKen to monetise its SK10 B15 field as its gas reserves turn from 2C to 2P.
Ultimately, it added that monetising these reserves is earnings and net asset value (NAV) positive, of which the expected first gas production is three to four years down the road.
Already a subscriber? Log in
The Star Festive Promo: Get 35% OFF Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
