KUALA LUMPUR: AmResearch is maintaining its Overweight call on the oil and gas (O&G) sector, underpinned by the re-acceleration in the country's O&G capex up-cycle and rising rates for offshore rigs.

In its research note issue on Monday, Sept 20, it said the rate for offshore rigs per day have increased for a second month in a row in three of four rig market segments tracked by ODS-Petrodata's monthly Offshore Rig Day Rate Index.

AmResearch said the deepwater fleet utilization fell to 95%, partially as a result of the ongoing moratorium in the US Gulf in the wake of the Deepwater Horizon disaster. The ODS-Petrodata Mid-Water Depth Semisubmersible Day Rate Index increased the most of the index group, rising to 725, its highest level over a year.

The ODS-Petrodata US Gulf of Mexico (250 to 300 feet) Jackup Day Rate Index increased 3ppts for the second consecutive month to 233, its highest level since May 2009.

"Given the re-acceleration in the country's oil & gas capex up-cycle coupled with the proposed listing of MISC's Malaysia Marine Heavy Engineering by end 2010, we maintain our OVERWEIGHT view on the sector with BUY calls on SapuraCrest, Alam Maritim Resources, Kencana Petroleum, Tanjung Offshore, Dialog Group and Petronas Gas.

"Our top pick continues to be SapuraCrest given its huge lock-in order book of almost RM10bil, which should sustain earnings for the next three years. We maintain our SELL call in KNM Group given its poor earnings deliverance," it said.