PETALING JAYA: Coastal Contracts Bhd
is still in discussion with Mexico’s state oil company Petróleos Mexicanos (Pemex) for the potential expansion of its gas processing capacity at the Perdiz onshore gas processing plant in Mexico.
TA Research said Coastal Contracts’ management indicated in a recent analyst briefing that discussions are ongoing with Pemex regarding a potential expansion of gas processing capacity at the Perdiz facility to address rising demand.
However, the research house said the scope, capacity and timing of any expansion remain subject to a final agreement and contract award.
The company announced in a filing with Bursa Malaysia on Dec 22 that it had secured an engineering, procurement and construction (EPC) and services contract in Mexico with Pemex, with an aggregate value of approximately US$1.14bil or about RM4.64bil.
The contract was awarded to a consortium led by Coastal Contracts’ Mexican joint-venture company Coastoil Dynamic SA de CV, together with Sistemas Integrales de Compresion SA de CV and Nuvoil SA de CV.
The consortium will undertake the EPC of a new gas processing plant with a capacity of 150 million standard cubic feet per day (mmscfd) at the Ixachi Field, as well as the design, construction and commissioning of related permanent infrastructure.
Ixachi is a major onshore oil and gas discovery in Veracruz, Mexico.
Construction periods for the various facilities range from 300 to 517 days, while the service period will commence upon completion and acceptance of the gas processing plant.
TA Research said the Perdiz Plant contract is in place until December 2027, and its expects further extensions beyond 2027 will likely be required to support rising gas production from the Ixachi Field.
Meanwhile, the Papan Plant also located in Mexico is scheduled to achieve commercial operations in November 2026, adding 150 mmscfd of gas processing capacity.
Following the latest management update, the research house said Coastal Contracts’ jack-up gas compression service unit, which has remained suspended since November 2023, will now be considered for potential disposal.
In other developments, the research house said, barring further delays, Coastal Contracts had also secured a deal for the 88-day charter for a liftboat from Saudi Aramco entered into on Dec 5, with an estimated contract value of about RM7.4mil.
The research house said the contract is expected to contribute positively to Coastal Contracts’ earnings and net assets this year and next year, with execution risks limited to normal operational factors.
The research house maintained its “buy” rating on Coastal Contracts with an unchanged target price of RM2.21 per share based on a sum-of-parts valuation.
For the third quarter of this year, Coastal Contracts reported a net profit of RM19.77mil compared with a net loss of RM49.07mil in the previous corresponding period, while revenue grew to RM15.93mil from RM6.27mil a year earlier.
