2015年2月4日星期三

Uzma - Fundamentally Resilient

Author: PublicInvest   |   Publish date: Mon, 15 Dec 2014, 12:10 PM 

Uzma’s performance going forward will be stimulated by medium to long -term contracts secured up to 2017, with further earnings enhancements from the strategic acquisition of MMSVS and services provided for the Tanjung Baram Fields RSC. The Tanjung Baram Fields is ahead of schedule, to meet its first oil expected by February 2015 whereby the remuneration fee contributions is expected in 2015. Our Outperform call is hence reaffirmed, with a TP of RM3.17, pegged to a 15x PE multiple on our FY15 EPS of 21.2 sen. Our view remains intact that Uzma’s operations have earnings visibility, and is therefore fundamentally less vulnerable to oil price changes. In the near-term we continue to look forward to potential projects in the areas of chemical enhanced oil recovery (CEOR) and brownfield rejuvenation.
Long term Orderbook. Uzma’s secured orderbook is about RM1.8bn, to last until 2017, with a bid book of RM3.1bn. The Group’s Tanjung Baram Fields RSC is currently 3.2% ahead of schedule, with the plan to drill its first well by end-January 2015. The Group should therefore see further earnings upside from the remuneration fee in 2015, but we have yet to account for it, pending clarity to the production numbers.
UzmAPRES will remain one of the Group’s focus, especially in periods of oil price uncertainties. The cost of production using the UzmaPRES ranges between USD5-8/bbl and is therefore an efficient oil enhancing solution which requires no capex and low opex. The Group has 9 leased-out units which are expiring in February 2015, but are at negotiation stages to confirm 2 more years of contract renewal. Going forward Uzma plans to add another 5 to 6 units by end-2015 in the regions of Malaysia, Thailand and Brunei. We understand the Group has intended on increasing its UzmAPRES units, however the limitations of the solution often hindered its viability in some fields. Today, modifications can be made to make the device more adaptable to different field specifications.
Ongoing activities. i) Awarded by Petronas to provide well testing equipment and services for Petronas Drilling Programmes – West Region (value – c.RM350m to end March 2017), ii) provision of integrated water injection studies (value – c.RM36m to end May 2016), and iii) the provision of drilling project management team for PMU wells (end September 2014 with an extension option for 1 year), iv) MECAS was awarded a contract by Talisman Malaysia Ltd to supply chemical and related services (value – c.RM62m to end July 2017 with 4 extension option of 1 year), and v) MECAS to provide oilfield chemicals and associated services to ExxonMobil E&P Malaysia Inc. (value – c.RM238m to end March 2018 with extension option of 2years), vi) Uzma’s new acquisition MMSVS will also undergo upgrading of its hydraulic workover units (HWU).
Source: PublicInvest Research - 15 Dec 2014