UMW-OG jacking up its fleet

by **Cals** Mon 13 Jan 2014, 18:19

Business & Markets 2014

Written by CIMB Research

Monday, 13 January 2014 10:02

UMW Oil & Gas Corp Bhd
(Jan 10, RM4.20)
Maintain add at RM4.03 with a target price of RM4.63: UMW-OG’s management sat down with about 50 fund managers in a series of meetings at our Malaysia Corporate Day on Jan 8, 2014. There were no surprises at the meetings. UMW-OG president Rohaizad Darus and acting head of corporate development Chew Eng Hong took the opportunity to walk investors through the company’s fleet expansion plan. Our Corporate Day was the company’s first investor event since its listing on Nov 1, 2013.

Management presented a compelling argument for growth, which is supported by the expected delivery of three new jack-up drilling rigs (Naga 5, Naga 6 and Naga 7) this year. The company currently owns three jack-ups (Naga 2, Naga 3 and Naga 4) and a semi-submersible rig (Naga 1).

UMW-OG ended financial year 2013 ended Dec 31 (FY13) on a high note by announcing two contracts in December: (i) a four-month US$19 million (RM62.1 million) contract extension effective June 2014 for Naga 2, which is in Vietnam; and (ii) a six-week US$7 million contract commencing in June 2014 in the Philippines for Naga 5, which is still under construction in Singapore.

Over the next three months, we expect the news flow to remain active and exciting. We will be on the lookout for the finalisation of the Naga 6 acquisition, and a second contract for Naga 5, even before the construction of the jack-up is completed in May 2014.

Accumulate the stock and ride the excitement as UMW-OG expands its fleet to take advantage of the shortage of Malaysian-flagged jack-ups and high requirement for this asset class in Southeast Asia. The company is currently Malaysia’s only jack-up rig owner. — CIMB Research, Jan 9

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This article first appeared in The Edge Financial Daily, on January 13, 2014.