Malaysia’s O&G sector faces muted short-term outlook


Dateline 2014-10-06, Borneo Post Online:

Malaysia’s oil and gas (O&G) outlook remains uninspiring in the short-run as timing of contract news flows remains uncertain.

In addition, Petroliam Nasional Bhd’s (Petronas) cautionary statement has sent negative vibes to the sector and crude oil price remain uninspiring, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said in a recent sector analysis.

“Given our cautious outlook, we believe investors should stay stock-selective and focus on companies that either has significant order-book to support forward earnings visibility, and/or companies that have an exposure to the brownfield/rejuvenation segments (which are marginal fields, brownfield alliances, mantainance; well intervention), since Petronas might look to existing oil and gas fields to meet crude oil production goals and capital expenditure (capex) classified projects might see sluggish times ahead,” it added.

The research house explained, thus far, the upstream segment saw a slowdown in contract flows (RM1.4 billion domestic wins versus RM3.1 billion in the second quarter of 2014, or 2Q14).

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