SAPURAKENCANA Petroleum Bhd and consortium partner Norway's Seadrill are in a photo-finish race to win potentially over US$5 billion (RM15.2 billion) contracts in Brazil.
Upstream, an oil and gas magazine, reported recently that the Seadrill-SapuraKencana group was competing neck and neck with the Technip-NorSkan consortium to secure the next batch of contracts to supply six to seven pipe-lay flexible support vessels (PLSVs) from Brazil's national oil company Petrobras.
AmResearch Sdn Bhd, which highlighted the Upstream report in its research note yesterday, said SapuraKencana and Seadrill may get the contracts to supply at least three PLSVs.
This is given that Petrobras may need to diversify contracting risks to more players.
Upstream, an oil and gas magazine, reported recently that the Seadrill-SapuraKencana group was competing neck and neck with the Technip-NorSkan consortium to secure the next batch of contracts to supply six to seven pipe-lay flexible support vessels (PLSVs) from Brazil's national oil company Petrobras.
AmResearch Sdn Bhd, which highlighted the Upstream report in its research note yesterday, said SapuraKencana and Seadrill may get the contracts to supply at least three PLSVs.
This is given that Petrobras may need to diversify contracting risks to more players.
"While a seventh PLSV may be awarded to Subsea 7 if Petrobras opts to diversify the risk ... Seadrill-SapuraKencana and Technip-Norskan are seen in the best place to secure the bulk of the fresh charters," AmResearch said.
The Seadrill-SapuraKencana joint-venture was previously contracted by Petrobras to provide three PLSVs with charters worth US$1.4 billion (RM4.2 billion) to work in the latter's pre-salt fields in 2014-2015.
Assuming that the joint venture secures the three PLSV job, AmResearch, however, doesn't expect SapuraKencana's forward net gearing to rise significantly above one time, given its net profit of RM1.2 billion to RM1.3 billion annually.
It pointed out that the group's equity contribution for the new PLSVs may amount to only RM270 million, assuming a 20:80 debt-to-equity financing for the 50:50 joint venture.
AmResearch early this month estimated that the group's net gearing would stand at 1.2 times upon completion of a US$2.9 billion (RM8.8 billion) acquisition of Seadrill's tender rigs next month.
The gearing could moderate to 90 per cent by end-2014 after a proposed placement of 969 million new SapuraKencana shares at RM3 each.
It noted that while the joint venture's capital expenditure pipeline of US$1.4 billion (including two derrick-lay vessels, three PLSVs for Petrobras and two more tender rigs) remains sizeable, US$500 million from the 50 per cent-owned PLSV will be funded largely off-balance sheet.
AmResearch has maintained its "buy" call on SapuraKencana with an unchanged fair value of RM3.70.
SapuraKencana shares closed 7.0 sen higher at RM2.94 yesterday with 18.11 million units changing hands.
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