Petra Energy has been notified by Petronas Carigali of the early activation of  the  Topside  Major  Maintenance  (TMM)  services  for  Sabah  operation effective from Jul14 until May18. The contract was first awarded in May13 for  a  5  years  period  effective  from  May13.  The  TMM  services  were originally scheduled to commence in Feb16. There is no firm contract value for  the  TMM  services  as  the  contract  is  on  a  call-out  basis.  (Source: Company announcement)

Comment: The early activation is broadly within our expectations - we have imputed in our forecast constant contract flow from the Petronas Carigali contract  (estimated  at  RM2.5bn)  starting  Jan15.  Maintain  SELL  with  an unchanged RNAV-derived TP of RM1.59. Petra Energy is currently trading at  19x  CY15  PER,  a  substantial  premium  to  small  cap  O&G  companies PER of 10-13x.

Source: HwangDBS Research - 1 Oct 2014