SapuraKencana Petroleum announced that its wholly-owned subsidiaries have been awarded contracts and extension with a combined value of c.USD72m (i.e. RM300m at the rate of RM4.20/USD). The contracts and extension awarded are as follows:

(1) EPCC works for Simultaneous Production and Drilling on D35DP-B by Roc Oil (Sarawak), expected to take place from 4Q15 to 1Q16;

(2) installation of structures and pipelines as well as other subsea works at Vasai East located 78km offshore Mumbai in the Arabian Sea, expected to be completed in Mar 2016; and

(3) additional five months extension to the original contract for SKD Alliance Semi-Tender Assist Drilling Rigs, lengthening the contract from Mar 2016 to Aug 2016. Note that the client (i.e. Foxtrot) still has the option to keep SKD Alliance on contract until 4Q16.

Comments: We made no changes to our estimates, as the combined value of the announced contracts and extension is small at RM300m (vs forecasted revenue of RM9.6/8.8bn in FY16/17 end Jan), and forms part of our annual orderbook replenishment assumption. Including these contracts and extension, total contract wins announced YTD16 (FY end Jan) amounts to RM2.3bn. We maintain our HOLD rating on SapuraKencana with an unchanged TP of RM2.00, based on 12x CY16 P/E.

Source: Affin Hwang Capital Research - 8 Dec 2015