Sapura Energy has entered into a Heads of Agreement to sell a 50% stake in its fully-owned subsidiary Sapura Upstream to Austria’s OMV AG.
Both parties are still negotiating on the proposed transaction which is based on an enterprise value of US$1.6b.
Comment
The announcement came as a surprise as the management had earlier considered listing its Exploration and Production (E&P) unit.
Nevertheless, we view the announcement as positive as the deal would not only raise cash but also create synergy as OMV is also an integrated oil and gas company like Sapura with capabilities in both upstream and downstream.
Synergistic partnership. OMV is involved in oil exploration and production in Europe, the Middle East, Africa, Russia and Australasia. In 2017, it achieved daily oil and gas production of 348,000 boe/d.
Its expertise will benefit Sapura Upstream in developing gas fields in offshore Sarawak, New Zealand, Gulf of Mexico and Australia.
Earnings Outlook
Earnings forecast maintained – We are keeping our EPS forecasts pending more details and finalisation of the deal.
Prospects are expected to be flat until earnings stream start to flow from the SK408 field and activity in the oil and gas industry takes off next year. The SK408 field will come on stream in late 2019. Sapura’s net reserve stands at 253 mmboe (95% gas, 5% oil) that could last for over a decade.
Valuation & Recommendation
We are maintaining our recommendation at BUY with a target price of RM0.42 (based on 0.5x P/B and a NTA of RM0.84 per share).
Be the first to like this. Showing 0 of 0 comments
Post a Comment
People who like this
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 3245 views | 3 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....