Perdana Petroleum (Perdana) announced yesterday that its subsidiary, Perdana Nautika SB, has secured a contract from Murphy Sabah/Sarawak Oil Co Ltd (Murphy) for the supply of 1 AHTS to support Murphy's 2012/2014 shallow water drilling programme. The contract is for a period of 2 years, with an extension option of 1 year effective from 27 June 2012. The contract value is about RM86m.

Good charter rates. The company did not disclose the charter rate/bhp in the announcement but based on our assumption that the AHTS is likely to be the 12k bhp series and is expected to operate 365 days, as well as a USD/MYR rate of 3.10, the charter rate/day would be about USD3.17/bhp (RM86m/2 years/12k bhp/3.10/365days). Hence, assuming that this is the rate which Perdana will secure from Murphy, it would represent a vast improvement over the average rate of between USD1.60-USD2.50/bhp  2 years ago.

Positive news but no change to our FY12-13 earnings.  This is because we had earlier factored in some orderbook replenishment for its vessels.

Maintain Buy. Our fair value for Perdana is unchanged at RM0.90, based on the existing PER of 12x FY12 EPS. Going forward, we think the worst is over for the company and expect it to turn around starting from 2HFY12. This is considering the fact that more new jobs will be created as O&G activities in Malaysia as a whole pick up, and as the flow of new projects from Dayang increase when the latter lands more brownfield services contracts.

Source: OSK