KUALA LUMPUR: Affin Hwang Capital research has maintained is buy call on Velesto Energy
with an unchanged 12-month DCF-based target price of 35 sen following its receipt of a letter of award from ROC Oil (Sarawak).
Velesto Energy announced that it has secured a US$31mil contract to assign the NAGA 4 drilling rig to ROC Oil (Sarawak) for 11 firm wells, which is under the D35 Phase 2 infill drilling programme.
It its report update, Affin Hwang said the Naga 4 contract with ConocoPhillips will expire by end-July while the Naga 3 and 7 contracts with Petronas Carigali are expected to have expired in June.
Meanwhile, the Naga 5 firm contract with repsol is likely to be completed by September with a renewal option for a further one year while Naga 8 is a on a long-term contract with HESS for three years, expiring by October 2019 with a renewal option for 23 months.
"We expect 2Q18 to have remained profitable with a drilling rig utilisation of around 75%, in line with our full-year forecast," it said.
The research house forecasts are unchanged as it had already assumed an average drilling utilisation rate of 71% in FY18 and 73% in FY19.
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