Sapurakencana Petroleum (SKP) announced on Bursa Malaysia yesterday that its wholly-owned subsidiary, TL Offshore SB (TLO), has entered into a USD25m contract for the procurement, construction and installation of a production/processing platform, pipelines and pipeline end manifold for the Manora Field Development, Thailand with Pearl Oil (Amata) Ltd, a Mubadala Petroleum affiliate.

More on the contract. The contract comprises the procurement of equipment and bulk materials, fabrication, transportation, installation and hook-up of a Wellhead Processing Platform and two 2km pipelines in the Manora oil field, which lies in 44m of water approximately 80km from the coast of Thailand. Works on this contract will be carried out via a consortium with Clough (Thailand) Co Ltd (CTL), a subsidiary of Clough Limited, whereby CTL will undertake the procurement and fabrication while TLO will undertake the transportation and installation. Works relating to this contract are scheduled to commence in September 2012 for completion in early 2014. TLO's scope of work is worth approximately USD25.0m.

No changes to our earnings forecast. As we have already factored in some orderbook replenishments for FY13 and FY14, we are making no changes to our earnings forecast.

Maintain BUY. We continue to like SKP, which is one of our top oil and gas picks, and value the stock at RM2.88, pegged to 20x on FY14 EPS. We believe that the company is poised to beef up its orderbook further in 2H12 as we expect Petronas to dish out more awards, especially with the Government anticipated to focus on developing the oil and gas sector in Budget 2013, due to be announced on Friday.

Source: OSK