Update

• Sapura Energy secured a contract from Mubadala Petroleum Ltd to build an integrated central processing (ICPP) platform facility in Block SK320, offshore waters of Sarawak.

• The contract includes undertaking engineering, procurement, construction, installation and commissioning (EPCIC) in the Pegaga development project and is expected to be completed by 3Q21.

• Mubadala, Petronas and Royal Dutch Shell will spend over US$1b to develop the Pegaga gas field, aiming for first gas by 3Q21. Mubadala is the operator of the block with a 55% share while Petronas and Sarawak Shell holds 25% and 20% respectively.

• The ICPP consists of an 8-legged jacket designed for gas throughput of 550m standard cubic feet of gas per day plus condensate in water depth of about 108 metres.

• The contract value was not specified. Excluding the Mubadala job, orderbook is estimated to be around RM14b after securing RM905m worth of jobs in January.

Earnings Outlook

• Earnings forecast maintained – We are keeping our EPS forecasts for FY18 and FY19 pending its upcoming 4QFY18 results.

• Risk – The group faces challenges in replenishing its orderbook amid tough operating environment despite stable oil prices.

Valuation & Recommendation

• Our recommendation for the stock is under review pending its quarterly results announcement later this month.

Source: JF Apex Securities Research - 22 Mar 2018