No oil companies will want to own rigs. They rather leave this dirty work to drilling contractors. Go watch "Deepwater Horizon" and understand that "love-hate" relationship between oil companies and drilling contractors. Besides, Petronas does not need 7 rigs all at the same time.



Max2838 PNB now holds 4.4 B shrs or 53% of total 8.32 B shrs...

If the oil price hits $75/bbl, it may be good for Gov't to take UMWOG private and park it is an integral biz of Petronas ... all these oil services companies are just stressing up our banks....

Where did you get the idea umwog got 300m cash? The working capital raised in the RI is supposed to be used to pay off advances from UMW holdings. And whatever you saw in the balance sheet before the RI were actually pledged to the bank to get financing and cannot be touched at all.


IronShirt umwog got 300m cash and oil still above 70. Must be reflected in stock price next week. 60c by cny

UMW-OG's borrowings are mainly USD but they are all borrowed from local banks. Interest rate could be about 4.5% and it's floating. And the Feds has indicated that interest rate will increase.

PNB needs to sell cos they can't hold more than 65% in umwog and their shareholdings will increase as they convert the RPS. Why need to convert the RPS so soon? To put it bluntly, umwog has no money to pay the RPS dividend. And the timing is right as the share price is above 30 sen.

I think when you buy this counter, have to be mentally prepared for the dilution effect from the RPS conversion and exercise of warrant. This is something that will happen sooner or later anyway. Just take the profit during their peak performance (maybe 2014) and divide it with the number of shares after full conversion of RPS and exercise of warrants. With that EPS figure, you can make a guess of how high this share can go, at most.

No wonder the price so weak, got RPS conversion. Will cause further dilution. No wonder PNB needs to sell Umwog shares. They can't hold more than 65% and this conversion will increase their shareholdings.

What does Hengyuan got to do with this counter? Both are doing different activities. You are suspecting HY will take over umwog? Please ... no synergy at all. The oil that comes out from the wells drilled by umwog belongs to the oil companies.


Effendy Tay Anybody knows who is the buyer of umwog corporations. Hengyuan received 1.7billion loans from several banks in Malaysia to inject more funds in the oil industries downstream. Won't be surprised if hengyuan is behind the take over to cater in house service. If that concludes biggest beneficiaries in umwog is likely be the one who has established oil exploration and refining in Malaysia buying at lowest price. During the booming years umwog was 4.50ringgit ,the lowest 29cts

Which analyst say this share is undervalued? I looked at the target prices in i3investor they are all mainly within 30 sen to 40 sen.



fl888 MACC should investigate the Board of Amanah Trustees Why and how they are selling continuously when oil prices are so high and This Share are undervalued by some analysts......a new style of corrrupt activities like FGV..

Under current industry condition, don't ever assume that contracts will be profitable. Some contracts are probably intended to allow them to be cash flow positive but not necessarily profitable. Furthermore, workover activities do not contribute a lot to their turnover. As a hint, take note that the value of all their HWUs combined is not even equivalent to one Naga. With such low value asset, the revenue contribution is not significant, assuming that petronas really call them out for work.


Meng Fatt Lee Amanah sell despite got contract from petronas , meaning disposal of shares does not related to its business and operation

If an oil and gas counter undervaluation can be determined by comparing against the oil price during its peak, there are plenty of undervalued oil and gas counters right now, not just umwog. Thhe is backed by Tabung Haji. Icon is backed by Ekuinas. Both are even cheaper than umwog.

For oil companies to commit capex on a well that will pump oil for the next 20 years, they must ensure the oil price is sustainable in future. A sudden short term oil rally is not going to make them jump start drilling campaigns. Even if oil companies believe this rally is sustainable, it will take around six months from planning to awarding of drilling contracts. Any contracts awarded will also be matched to market day rate, which is currently plagued with rig over supply.

Changwt's argument that umwog's undervaluation is flawed because at the point when umwog was at the peak price, investors were willing to pay that price due to their perception that oil price will continue to go up or stay expensive. I am sure most of us will recall at that time, people were so paranoid that the world would run out of oil, peak oil theory and so on. So, it was a no-brainer buy if those theory was truth. By now, most of us know that it was opec that was causing the high oil price all this while. And why umwog's oil price stay low currently? Again investor's expectation of future oil price. Unless there is indication that shale producers are closing shop or banned in US, it's hard to see if oil price could ever reach the heights of 2014 again. Without a high oil price, it's hard for this company to post fantastic profit. This company will survive but for the share price to go back to IPO price or even the 4.40 peak, it's really hard.


As for the recent umbrella contract, it could be a prelude for disposal of the HWUs. By having such contract, umwog can prove their HWUs are technically accepted by petronas and hence, command a better disposal value. I honestly don't think they should hold on to the HWUs and compete with Uzma.

Agree. As what Warren Buffett said, "Honesty is a very expensive gift. Don’t expect it from cheap people.” It also doesn't pay to be honest to people with an already pre-set mindset.

And also don't trust certain people here that post comments and delete them after that.

Yes, don't trust analysts. Most of them rely on information or projection from the management. Most of the time, what they are getting are half-truths. Their analysis will never be accurate. The best joke they ever came out with was way back in 2014 when the oil price collapsed, they thought this company was so cash-rich that it would go on an acquisition spree for beaten down oil and gas companies.

Don't just read headline. Study the contract, what's the value, duration and terms. Take for example this call out contract. Umwog only gets income when is being called out for work and in the meantime, they have to reserve all their HWUs to petronas. Is this a good contract? What about the crew and accommodation work barge? Can umwog get them on standby at zero rate? Is this how petronas treat its fellow Malaysian companies?

Do you all actually know what this contract is all about? Please find out more what is actually a call out contract. Also find out how much is the contribution of workover activities to their revenue in the past.

Orders for services under the Contract are individually made through call-outs and at stipulated prices. At present there has not been any call-out or work orders for services.

Read the above and understand it.

Oil companies plan their drilling programme based on a long term oil price assumption. It's a 20 to 30 years commitment. On contrary, shale producers can jump in immediately because they are onshore, many of them have already drilled the wells and is waiting for the right price to start the production.

The way you guys justify PNB's disposal is so odd, to raise money to pay dividend. PNB so poor one meh? Have to sell an investment that has not matured yet to pay dividend? Why don't they sell Maybank instead since the share price is so expensive already? Just be honest, if you are PNB, which one would you sell to raise money, Umwog or Maybank?

Just ask yourself if the current oil price rally is sustainable or just a short term event. Please also check back on why the oil price fell at the first place since 2014 and if the cause of that fall is still here. Please also remember that you can only make money by guessing future event, not based on what the market already know. Reasons like improved financial result is needless to say as there will be interest savings after the right issue and market would have factored in this scenario already. Also remember the average cost of PNB is not the IPO price of RM2.80 after they exercise the right and warrant. I believe is less than RM1. This company is not cash rich. If they are, they won't need to do the RI. The name UMW is just a name. All the UMW old timers are no longer in this company. The word "oil and gas" is very wide. The exact word to describe this company is "offshore drilling". They also do pipe threading but that's less than 10% of their turnover.

CFO stepped down:

http://www.bursamalaysia.com/market/listed-companies/company-announcements/5654377

Umwog will have a new CEO? Any source on this?

Yes, please buy some more. Don't just exit just because of a slight pull back. Take that chance to buy more. TP is infinity. Company is not just cash flow positive but "cash rich" and since 2014, some analysts even believed umwog is capable of taking over other smaller oil and gas companies.

Oil and gas are not just used for transportation only. The usage is a lot more wider than that.

There is still plenty of oil in the world but it is being made artificially expensive due to OPEC controlling the supply in the past. As a consumer, I am glad shale producers came in and change the entire game.

Assuming the full year profit is RM50m, what would the PE looks like at the share price of 30 sen?

CIMB's TP is 33 sen based on their current assumptions which I think is quite realistic to me.

I know I am doing a good deed here by warning everyone since beginning of this year, when price was probably around 90 sen? I know another person who is good in posting here but will delete his postings later on.

1. Brent is projected to remain in the USD 50-60 price range......Petronas crude trades at a premium of USD 5 above Brent
- this price range will not help this company

2. Petronas requires 10-12 rigs.............UMWOG has 7 so possible full utilization
- No comment, let see if all will be given to locals, at what rate and number of wells

3. Mgt says above USD 50 price..........they can make money
- They used to say they can profit with a certain level of utilization. Anyway, do your own analysis, don't trust management or analyst or periodicals. Not to say they are lying but they are very good in telling half truths.

4. UMWOG is still on cost cutting phase...........savings here can offset maintenance of rigs
- Really nothing else to cut, their crew pay has just been cut recently.

5. Borrowrings have halved...........interest savings RM 15m per qtr
- Needless to say

6. Long term loans have been refinanced...........possible some interest savings
- Needless to say

7. Cash tied to borrowings have been freed up.
- That cash should have been freed up long time ago. This cash are IPO proceeds used as collateral to borrow USD. Without this cash tied to loan, there should not be any investment income in Q4.

8. Charter rates at USD 70-80k better then before
- Maybe can ngam ngam breakeven (just try to be positive)

9. Rigs at full utilization currently..........some new contracts sourced.....possible minimum impairments (not a cashflow item)
- Not interested to know, even if full utilization, profit won't be fantastic. The charter has to go up. Unfortunately, contract value no longer disclosed.

10 Mgt says they will be cashflow positive after rights issue
- What drive a share price up? Being profitable or cash flow positive?

11 No need to buy new rigs
- Yeah, the price of new rig won't go up so soon, no hurry to buy a new one.

12 Mkt price is around 30 sen........low downside risk
- When it was 90 sen ... then 80 sen ... 70 sen ... 60 sen, it was also viewed as low downside risk during those prices. Check back the postings. Anyway, my point is, your amount of loss is the same when the price drop from RM3 to RM1.50 or from 60 sen to 30 sen, your investment value will be halved.

13. PNB is the largest shareholder..............Petronas may give full support
- PNB has always been the largest shareholder indirectly, Petronas is giving support now because of the current low oil price. Petronas also has its KPI to meet and employees to feed. If the rig is down, Petronas will not pay them but may even sue for damages. So what it is owned by PNB.

N2 and N3 will approach 10 years old soon. It will not command the same charter rate compared to a new rig. Maintenance will be costly, just like an old car. They can monopolise the market now because of Petronas. If oil price ever reach USD80, I doubt Petronas will continue to give preference to them.

They should not buy new rigs only when oil price reaches USD80, just like why we should not buy this counter only when oil price reaches USD80. They, like many of us here, should buy when price is low unless ... the management thinks oil price unlikely to reach USD80 soon and hence, no hurry to buy new rig. I am sure PNB can give them the needed fund for this, if it make sense.

Q4 should better than Q3 with interest savings, but that higher profit will be shared by many shareholders. Let's dissect the Q3 result. If we exclude the investment income, it is still a loss, probably dragged down by oilfield services segment. Not sure when are they going to sell off this business.

I wouldn't consider the share price on uptrend, depending on your investment timeframe. To me, it's more like hovering sideways.

We can't compare ourselves to PNB. Their exposure in this company is probably a fraction of their total investable fund. If you are only committing a fraction, no harm trying your luck. Besides, PNB has different investment timeframe, they had UMW at about 30sen way back in the 80s and can hold very long. Is that your plan?

Obviously, their rigs will get old and for every dollar earned on charter rate, more will have to be spent on maintenance. Older rigs will get lower charter rate too. And how can you spend more on maintenance when at the same, these rigs are also getting high depreciation cost because they are purchased at high price. This will not apply if their rigs are well impaired but I don't think so. I have posted a link previously which provides indicative market value for each rig. Why not you check out those values and compared against their book value.

As an investor, you should know that if you entered an investment at high price, you should continue to enter at the low price to average down the cost. But if you have depleted all your financial power during good times and unable to buy more when price is low, you will have to wait a long time to breakeven. The same apply in this rig business.

I have explained my reason. It's your turn to explain why my comment is rubbish.

Don't get so upset. I am sure you have cut loss at 60 sen. Buy now and keep it for 10 to 20 years. Does that sound positive to you?

Really have to respect these shale producers. I thought they have all closed down. When the price has gone up high enough, they still have the financial muscle to add more rigs. Does Umwog have the financial muscle to buy more rigs when it is cheap now? They can't compete in a long term by relying on these rigs that are all bought at prices higher than a brand new one today.

Office staff got an increase in June this year, 3% to 12% depending with or without promotion. Really good employer. Now Q3 has "return to the black", maybe will have bonus this year.

Don't think employees will be disgruntled with this company. Paid bonus of 7 - 8 months during the good times. Even at bad times like this, still giving salary increase. Senior mgmt get a car with parking, Touch n Go, petrol card all thrown in. Even Petronas doesn't have car benefit, Medical coverage for whole family. Except for crew, there was no forced retrenchment. Redundant senior mgmt are being given another "role" just to justify their continued employment. Really a good employer. Maybe the unhappy ones are their vendors. This is what happen when you don't pay your vendor.

araj87, not just accountants, I heard even the CFO is leaving soon.

Those that bought in before the quarterly result are probably positioning to sell now when others are buying in after the result is out. It's a matter of time before investors start to realise that this counter didn't really "return to the black". And I wonder how much this company pays for that headline.

Property and rig are not the same. Property will appreciate. Rig will depreciate. Property can be left vacant and still appreciate. Rig needs to be parked somewhere, maintain it and cost some money.

Even at their most profitable times, take a look at how much dividend they pay out and imagine what they would pay at times like this. This is a growing company. They can't pay too much dividend even if they are profitable. And unfortunately, before they managed to grow up, they fell into deep hole. This company never have ESOS but I believe many employees are stuck with the IPO at RM2.80.

If oil services business is so attractive, the oil companies would have done it themselves.

Well, it's not like Petronas is going to offer a higher charter rate to umwog just because of their stellar performance.

Assuming with 7 rigs combined and pledged to the bank, the max they can get is USD550m, tell me is this good news or bad news? How about comparing that amount against the book value of their assets. Does it give you any hint?

Very interesting article:

https://www.bassoe.no/jackup-rig-owners-watch-as-borr-drilling-takes-control/news/62/

I don't work for PCSB, I work in an offshore drilling company and know this industry quite well. Hurry up umwog, go buy up Perisai's rig which is 400ft spec. Perisai is very distressed and very sure they will sell at low price. Naga 2 is approaching 10 years old already.

I am not giving any negative news, just reminder. This counter can buy or not depends on your investment timeframe, I said this before. UMW was also this cheap when it was taken over by PNB in the 80s.

The cheap rigs I meant are brand new rigs waiting for buyers at the ship yard. It's cheap because the price is much lower than what umwog had paid in the past. Rigs are always valued based on what the charter rate it can command. There used to be a time when umwog had to buy rigs from speculators that pre ordered the rigs at a high price. You know you can also profit from rig speculation. That was the time when umwog went around and said their revenue was constrained by availability of rigs. So confident with the industry. So if the charter rate is going to go up, then they should also buy rigs before the price go up, like how the investors buying their share price when it's still cheap.

Yeah, drilling activities now on the rise. Umwog should buy more rigs before the price of rigs increase. Borrow more money, ask for more RI and buy more rigs now. Show us how confident you are with this uptrend.

Most of their loan is on 5+5. That's not really long term considering the rig can be used up to 30 years. After 5 years, the bank may not agree to a rollover, then how? Now they are pushing the financing limit by refinancing some of their assets that are already been fully paid off.

By the way, the RI proceeds are used to pay off part of the bank loan only. Another few hundred which is supposed to be working capital will be used to pay off UMW advance. You call that cash rich? If they are cash rich, they should buy more asset now cos it's cheap. Instead, they may be disposing their HWU assets and pipe threading business.

Your strategy only allow you to be cash flow positive. What about depreciation? It will take away huge profit. I never say this company will go bankrupt but don't expect fantastic profit and best of all, the profit is shared by large amount of capital.

Haiiii ... said until saliva run dry already. The assets of this company is bought at the time when oil price was high, mostly with debt, now oil price has dropped, their asset value also drop but debt remain very high, they can't roll over their loan with the reduced value of asset, so shareholder has to make up the shortfall with a big hit on dilution. The last i heard, they are still trying to refinance their existing debt, the RI proceed only reduce a portion of it.

If a newcomer joins in, they will have the cost advantage because the asset value is matched with the current oil price vs. umwog, all bought at high price.

Well, if the industry is recovering soon, umwog should buy more rigs now cause it's dirt cheap.