First gas from Bayan Mopu to boost T7 Global’s income profile

PETALING JAYA: T7 Global Bhd, which is now an integrated energy solutions provider, will likely achieve first gas for its Bayan mobile offshore production unit (Mopu) by the second half of this year.

Mopu is a type of purpose-built portable offshore structure that is used in the oil and gas production.

UOB Kay Hian (UOBKH) Research said the first gas from Bayan Mopu would most likely boost the company’s long-term income profile.

“The Mopu is expected to earn between 10% and 15% profit margin, on an order book of less than RM1bil for 10 years from the first gas date,” the brokerage said in a report. Hence, the research firm suggests that the Bayan Mopu has a significant impact on T7 Global’s earnings, closely resembling the profit base of pre-2020 years.

Moreover, UOBKH Research pointed out that the Mopu segment has lesser competition due to its niche nature and T7 Global would be able to capitalise this advantage.

It said Mopus are popular solutions used in shallow-water projects in the Middle East and Asia.

UOBKH Research said T7 Global faced competition from Middle-East backed rig contractors for overseas Mopu opportunities like in Thailand, despite the relatively small capital expenditure values associated with Mopu’s. As for Malaysia, it said the barrier of entry is high given there are Petroliam Nasional Bhd (PETRONAS) licence codes related to Mopu expertise.

The research firm noted that other known qualified Mopu contractors include MISC Bhd, Coastal Contracts Bhd, Handal Energy Bhd and Uzma Bhd.

“Aside from Uzma, the other local peers are not aggressive on Mopu opportunities,” it said.

Moreover, UOBKH Research believes that T7 Global would continue to charge by replenishing a new Mopu every two or three years. One significant Mopu project on the horizon is the upcoming phase of the North Sabah South Furious Waterflood Phase 2 Project, initiated by Hibiscus Petroleum Bhd, it pointed out.

The research firm said that based on the field development plan approved by PETRONAS in late 2022, there will be a conversion of a decommissioned drilling platform from the Tanjung Baram field into a new wellhead platform, currently being executed by Brooke Dockyards.

“The new wellhead platform will be bridged-linked to a water injection facility (Mopu) targeted to be added to the field by August 2024,” it added.

According to UOBKH Research, Hibiscus has provided official guidance that the overall project development, including drilling capital expenditure (capex), for the North Sabah South Furious Waterflood Phase 2 Project amounts to a net capex of US$100mil (RM467mil)

“This implies the Mopu-only capex commitment will be smaller vs the Bayan Mopu, and hence the project size should not overly stretch T7 Global’s balance sheet,” it opined.

The bid outcome for the Hibiscus Petroleum Mopu contracts are still not out. UOBKH Research said if T7 Global secures the Mopu it will elevate its status.

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