Perisai’s FPSO starts work

Perisai’s FPSO starts work
Business & Markets 2013
Written by Alliance IB Research  
Thursday, 12 December 2013 09:28

Perisai Petroleum Teknologi Bhd
(Dec 11, RM1.50)
Maintain neutral at RM1.46 with a target price of RM1.36: Perisai announced that its floating production, supply and offloading vessel (FPSO), named Perisai Kamelia, has been successfully deployed in the North Malay Basin early production system with the vessel charter having commenced in November 2013.

Perisai and EOC Ltd jointly own Perisai Kamelia (51:49) and the vessel has been contracted to Hess Exploration and Production Malaysia BV for a three-year period. The charter is valued at US$272.1 million (RM870 million).

With the successful start-up and commissioning, earnings from Perisai Kamelia are expected to commence from the fourth quarter of financial year 2013 (4QFY13) ending Dec 31.

The news is positive for Perisai as earlier in the year, there was concern that the FPSO contract might be deployed later than expected. This was due to a three-month delay in completing the acquisition of a 51% stake in the FPSO which was finally completed in August 2013.

We have already factored in earnings from the FPSO starting November 2013 and the vessel will offset the loss of earnings from Enterprise 3 — a derrick pipelay barge — and the Rubicone mobile offshore production unit (MOPU) in 4QFY13.

Going into FY14, with a full-year earnings contribution from Perisai Kamelia, we forecast earnings per share (EPS) growth of 35% year-on-year (y-o-y). This growth will also be driven by the PP101 jack-up drilling rig which is slated for delivery in mid-2014.

For now, we understand that Perisai is actively pursuing several contracts, including: (i) a contract for the Rubicone MOPU which can be in the form of a matured field development venture (Block PM9, off Peninsular Malaysia, with Canada-based Talisman Energy); (ii) installation work for Enterprise 3; and (iii) a rig charter for the PP101 jack-up drilling rig.

Our target price of RM1.36 is based on FY14 EPS pegging an industry mid-cycle price-earnings ratio of 11.7 times.

We maintain “neutral” on Perisai at this juncture, pending news on the group’s PM9 matured field tender with Talisman and other contracts.  We see downside risk to our FY14 estimates if Perisai does not secure charters for Enterprise 3 and Rubicone MOPU by mid-FY14 and further downside if there is no timely contract for the PP101 rig upon its delivery. All three assets are expected to contribute up to 40% of FY14 earnings. — Alliance IB Research, Dec 11

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