Petra Energy's MCM award an encouraging development, says PublicInvest

KUALA LUMPUR: PublicInvest Research said Petra Energy Bhd's unit Petra Resources' award of the contract by Petronas Carigali is an encouraging development.

The contract involves the provision of maintenance, construction and modification (MCM) services for a duration of five years with a one-year optional extension, effective from SEpt 20, 2017, to Sept 19, 2020.

The value of the contract was not disclosed as the MCM award is on a call-out basis and dependent on scheduled work orders by Petronas Carigali.

Under the terms of the contract, Petra Energy, amongst others, will provide contract management, project execution, procurement and marine spread to carry out the maintenance services for Petronas Carigali’s facilities, offshore Sabah.

"We are encouraged over this development, as we had expected potential contract awards to have been delayed," said PublicInvest Research.

The research firm maintained its Neutral recommendation on Petra Energy with an unchanged target price of 95 sen.

It believes that with oil prices trending above US$60 per barrel, the contract should encourage capex spending and the retarting of more activities. 

"Albeit this, for the interim, the Group is still expected to experience higher costs and narrowed margins from re-basing of industry costs and rates during the lower oil price period."

Petra Energy's order book currently stands at RM1.5bil to last up to 2022, with a tender book of RM1bil.