SapuraCrest venturing into Qatar through JV

KUCHING: On the sidelines of the recent Asia Oil and Gas conference, SapuraCrest Petroleum Bhd (SapuraCrest) confirmed its plans to crack the Middle Eastern market through its newly-formed joint-venture (JV) in Qatar, starting with marine services, followed by the installation of pipelines and facilities (IPF) and drilling.

According to CIMB Investment Bank Bhd (CIMB Investment), the ownership of strategic assets gave the company an edge as it could control the availability of the assets and its margins were shielded from high third-party charter rates.

To recap, on June 1, SapuraCrest announced a 51:49 JV with Al Rayan Investment LLC in Qatar to identify, pursue and undertake opportunities in the country’s oil and gas industry.

The research house highlighted that once the marine services business is up and running, SapuraCrest was keen to bring its installation of pipelines and facilities (IPF) and drilling teams to Qatar to scout for opportunities in the Gulf region.

For the IPF business, the company would leverage its track record in India where it had a 40:60 JV with Larsen & Toubro and a 26:74 JV with AP Prakash Shipping Company.

Furthermore, CIMB Investment understood that Seadrill Ltd (Seadrill) was particularly excited about drilling opportunities in the Middle East. A check of Seadrill’s website showed that the Norway-based company had a presence in Asia, Americas, Europe and Africa but not the Middle East. The 51:49 JV of SapuraCrest and Seadrill owned five drilling rigs. Seadrill also had a 23.6 per cent stake in SapuraCrest.

The research house said the venture into the Middle East was in line with SapuraCrest’s objectives of becoming more competitive in the international arena and reducing its dependence on local projects.

In the financial year 2010, overseas businesses accounted for 30 per cent of revenue, higher than the financial year 2009’s 28 per cent. The company hoped to derive 40 per cent to 50 per cent of its revenue from international operations by the financial year 2013.

CIMB Investment was positive on SapuraCrest’s preliminary moves in the Middle East. However, it understood that the award winning contracts, if any, would only take place in the financial year 2012. It therefore maintained its earnings forecasts and target price of RM3.02 per share, pegged to an unchanged target market price-to-earnings ratio of 15 times.

The research house said SapuraCrest continued to be its top pick for the oil and gas sector. The potential re-rating catalysts were active order book replenishment, success in new markets and a growing fleet of strategic assets.


- by Borneo Post