SapuraCrest Petroleum Bhd (SapCrest) and Kencana Petroleum Bhd (Kencana) are forecasted to see boosted earnings from a shared floating, production, storage and offloading (FSPO) contract, possibly in the near term.
The two oil and gas players separately announced agreements with their Berantai marginal field partner Petrofac Energy Developments Sdn Bhd (Petrofac) to each acquire 24.5 per cent interest in Berantai Floating Production Ltd (BFPL) for US$85.7 million cash.
BFPL would invest in an FPSO that would be used for the project. Petrofac would retain 51 per cent of BFPL and each equity partner would also provide a shareholders’ loan to BFPL to finance the FPSO investment and conversion although BFPL would also likely secure external financing.
RHB Research Sdn Bhd (RHB Research) stated in a research note, “While we still like the prospects of the merger (SapCrest-Kencana) which will create a large and formidable competitor for regional oilfield services (and especially for projects in Malaysia), we believe there could be some profit taking in the near term.