Petronas finds "significant" oil off Malaysia's Sabah

Tue Nov 15, 2011 3:56am EST

* Reserves of 227 mln boe, oil output rate of 8,200 bpd

* Estimated reserves have upside potential - Petronas

* Sabah has 12 pct Malaysia's gas reserves, 25 pct of oil-analyst 

By Min Hun Fong

KUALA LUMPUR, Nov 15 (Reuters) - Malaysia's Petronas discovered oil offshore Sabah in the latest "significant" find this year in the hydrocarbon-rich state on Borneo island, as the national oil company sets to boost reserves and output amid easing production costs.

Initial estimates put the well's reserves at 227 million barrels of oil equivalent (boe) and tests in three different reservoirs yielded a maximum output rate of 8,200 barrels per day (bpd), Petroliam Nasional Bhd (Petronas) said on Tuesday.

Petronas' exploration and production arm, Petronas Carigali Sdn Bhd, is the sole equity holder of the production-sharing contract (PSC) for the block. Wakid-1 is the second well drilled in the block. The first, Tambuku-1, yielded only minor gas discovery, Petronas said in a statement.

"Petronas Carigali plans to further appraise the discovery in the near future," it said, adding that the estimated reserves have upside potential.

The oil find comes four months after Petronas said it has discovered significant gas in the shallow waters off the coast of Borneo island.

Sabah has about 11 trillion cubic feet (tcf) of gas and 1.5 billion barrels of oil in its reserves, representing about 12 percent and 25 percent of Malaysia's gas and oil reserves respectively, said FACTS Global Energy analyst H.S. Yen.

Subramanya Bettadapura, Director of Energy & Power Systems at consultancy Frost & Sullivan Asia Pacific, said the East Malaysian state has potential gas reserves of 10 tcf and oil reserves of 2 billion barrels on a conservative estimate.

"The new discoveries indicate that there's a lot more oil out there," said Yen. "Since Petronas has a stake in all fields either through total equity (in the case of Wakid-1) or through its cemented position in all Malaysian PSCs, any oil/gas discovery is good for Petronas."

Crude oil output in Southeast Asia's second-biggest oil and gas producer is seen rising 3.3 percent next year, reversing a decline in 2011, and liquefied natural gas production may rise, the government said last month.

Oil production is expected to recover to 620,000 bpd, after an estimated 6 percent drop this year to 600,000 bpd, extending a 3.1 percent fall in 2010, it said.

SEEKING BEST RETURNS

Shamsul Azhar Abbas, who became Petronas chief executive last year, has led the producer to rejuvenate domestic fields and drill in deeper waters at home, while seeking to "high grade" its global operations by acquiring more valuable assets in Asia, West Africa and South America and exiting from less profitable ventures such as Algeria.

"Petronas is putting capital where they can get better returns for the risk involved," said Andrew Wong, associate director at Standard & Poor's in Singapore. "It recognises that certain areas such as the Middle East and North Africa are a bit more volatile and present higher risks."

Last week, Royal Dutch Shell and Petronas agreed to bolster output at fields off Sarawak and Sabah, as Malaysia works on coaxing more oil out of matured wells to stem a natural decline via projects that may lead to an additional 90,000 to 100,000 bpd of crude.

The development of the existing fields of Baram Delta off Sarawak and North Sabah using enhanced oil recovery technology will increase the nation's reserves just as drilling costs taper off amid a global economic slowdown while oil prices stay high.

U.S. crude is up 7.1 percent this year, poised for a third year of gains after climbing 15 percent in 2010 and 78 percent in 2009.

"Petronas is developing Labuan and Sabah region as the deepwater regional hub," said Bettadapura of Frost & Sullivan.

"As many as seven deepwater fields are being developed around this region. The Sabah-Sarawak Pipeline and the Sabah Oil & Gas Terminal are major investments in the region to exploit the hydrocarbon reserves in Sabah." (Additional reporting by Jane Lee and Florence Tan in SINGAPORE; Editing by Ramthan Hussain)

http://www.reuters.com/article/2011/11/15/petronas-idUSL3E7MF0GF20111115

A Brief Look at UMW

UMW Holdings Berhad

Business Description:
UMW Holdings Berhad (UMW) is a Malaysia-based company. UMW operates in four segments:

1. automotive; 
2. equipment, which supplies marine engine, material handling and compressed air equipment; 
3. manufacturing and engineering, which provides engineering solutions to automotive components, transportation, petrochemicals, oleochemicals, and oil and gas industries; 
4. oil and gas, and others. 

Its oil and gas segment includes five upstream activities: manufacture of oil country tubular goods and line pipes; oil and gas exploration operations; fabrication of oil and gas structures; provision of oilfield services, and supply of oilfield products. The operations of UMW are carried out in Malaysia, Australia, China, Hong Kong, India, Indonesia, Myanmar, Oman, Papua New Guinea, Singapore, Taiwan, Thailand, Turkmenistan and Vietnam. During the year ended December 31, 2009, UMW sold 248,521 units of Toyota and Perodua vehicles.

Current Price (7/1/2011): 7.61
2009 Sales 10,720,861,000
Employees: 10,000
Market Cap: 8,758,836,040
Shares Outstanding: 1,150,964,000
Closely Held Shares: 17,000

2004 DPS 7.2 EPS 16.5
2005 DPS 9.9 EPS 28.0
2006 DPS 13.7 EPS 30.0
2007 DPS 15.9 EPS 43.6
2008 DPS 30.3 EPS 51.8
2009 DPS 24.7 EPS 34.2
9M10 DPS 23.50 EPS 43.55 NTA 3.5939

Recent Financial Results

Announcement Date		Financial Yr. End		Qtr	Period End		Revenue RM '000		Profit/Lost RM'000		EPS		Amended
22-Nov-10		31-Dec-10		3	30-Sep-10		3,087,276		262,199		13.17		-
20-Aug-10		31-Dec-10		2	30-Jun-10		3,282,075		342,994		18.74		-
20-May-10		31-Dec-10		1	31-Mar-10		3,033,157		232,268		11.81		-
23-Feb-10		31-Dec-09		4	31-Dec-09		2,969,431		169,967		9.04		-

Estimated EPS for 2010 = 43.55*4/3 = 58.07 sen
Projected PE for 2010 = 7.61 / 0.5807 = 13.1 x

Historical
5 Yr
PE range 10.4 - 15.4
DY range 5.1% - 3.5%

10 Yr
PE range 9.9 - 14.2
DY range 4.0% - 2.8%

Capital Changes

2003  2/3 Bonus

2008  1 to 2 Share Split

Malaysia wants to be Asia's oil field services, equipment hub

By Kamarul Yunus
Published: 2010/11/04

MALAYSIA aims to become an oil field services and equipment (OFSE) hub for Asia, leveraging on its strategic location at the centre of the Asia Pacific region and adjacent to the international shipping lanes.

Under the Economic Transformation Programme (ETP), three entry point projects (EPPs) have been identified to attain the target.

As outlined under the National Key Economic Activity (NKEA) for oil, gas and energy sector, the three EPPs are to attract multinational companies (MNCs) to bring a sizeable share of their global operations to Malaysia, the ETP report said.

The projects are also geared at consolidating domestic fabrications, developing engineering, procurement and installation capabilities and capacity through strategic partnerships and joint ventures.

The global OFSE market is valued at RM800 billion and has undergone rapid growth of 25 per cent an annum in recent years.

With a burgeoning domestic oil and gas industry, proximity to oil fields and a cost-competitive workforce, Malaysia is well-placed to become Asia's OFSE hub.

In addition, by increasing competitive pressures in the domestic market, there is potential for Malaysian companies to first become domestic champions and subsequently regional champions as it captures a larger share of the regional market.

Under the sector's NKEA, the target is to attract 10 to 20 major international companies in the OFSE industry, bringing about 10 per cent of their business operations to Malaysia.

"This translates to around 40 per cent of their regional activities and would mean positioning Malaysia as a cost-competitive base for engineering, procurement and construction as well as strategic base for installation activities in the Asia Pacific region," the report noted.

If the goal is met, the OFSE industry will have considerable impact, creating over 20,000 jobs and almost RM6.1 billion of incremental gross national income (GNI) by 2020.

A permanent government body to be known as Oil Field Services Unit (OFSU) will be set up. It will be responsible for overseeing the oil field services industry's growth and development.

Comprising 20 people, with at least 10 of whom will have the oil and gas industry experience, OFSU will be fully operational within the next six months.

Among others, its responsibilities are to make recommendations on how to restructure the domestic industry to create a more competitive environment and position the industry and its companies for growth, and to promote the Malaysian OFSE industry and companies to overseas firms and investors.

OFSU will require only minimal funding of RM5 million a year to cover its operating expenses. However, the success of the EPP is contingent on attracting foreign players to set up operations here, which would require estimated funding totalling RM6.8 billion. This comprises of RM6.3 billion in private investment and RM500 million in public investment.

On the whole, the ETP has identified 12 EPPs and two business opportunities within the NKEA for oil, gas and energy sector.

"These EPPs will contribute RM47.1 billion to GNI to meet the 2020 targets. An additional RM61.2 billion will come from business opportunities and baseline growth," the report said.

Thus, the NKEA expects to deliver a RM131.4 billion GNI impact and create an additional 52,300 jobs in this sector.

A significant proportion of these jobs will be highly-skilled jobs, with an estimated 21,000 or 40 per cent for qualified professionals such as engineers and geologies, with monthly salaries in the range of RM5,000 to RM10,000.

The incremental GNI includes RM23.1 billion of GNI from the multiplier effect created by EPPs from other sectors.

The largest sources of the multiplier effect on the oil, gas and energy NKEA are palm oil, tourism and electronics and electrical NKEAs, for example, an increase in usage of energy due to an increase in tourists visiting Malaysia.

The oil, gas and energy NKEA is targeting a 5 per cent annual growth for the sector from 2010 to 2020. This is an ambitious goal, particularly against a backdrop of the natural 2 per cent decline of oil and gas production.


Read more: Malaysia wants to be Asia's oil field services, equipment hub http://www.btimes.com.my/Current_News/BTIMES/articles/ogas/Article/index_html#ixzz14J1VBcRc

Comment: This news is positive for the oil and gas sector of Malaysia. It is also good for Coastal.

Malaysia was well on track to become the fourth deepwater oil and gas hub in the world.

DPM: Malaysia can be come global deepwater oil, gas hub

By Roy Goh

Published: 2010/07/23

MALAYSIA can become a key deep-water oil and gas (O&G) hub in the world, but this window of opportunity is not perpetual, says Deputy Prime Minister Tan Sri Muhyiddin Yassin.

The answer lies in its capacity and capability, he said, stressing that it is paramount for the country to leverage and build on existing O&G assets.

"If done right, Malaysia can become one of the world's key deep-water O&G hubs after Houston, Rio de Janeiro and Aberdeen," he said.

Muhyiddin was speaking to reporters after witnessing a memorandum of understanding signing ceremony between Asian Supply Base Sdn Bhd and Labuan Shipyard and Engineering Sdn Bhd in Labuan yesterday.

Technip Group president and chief executive officer Bernard Di Tullio at the 15th Asia Oil and Gas Conference last month said Malaysia was well on track to become the fourth deepwater oil and gas hub in the world.

Apart from Technip, Di Tullio said other key players in deepwater Malaysia include Malaysian Marine Heavy Engineering, Sapura and Aker Kvaerner.

"Sabah has shown a strong potential in the O&G business," Muhyiddin said, adding that recent deep-water field discoveries there are now being developed and expected to begin production between 2011 and 2015.

"These sizeable ultra deepwater blocks offshore, coupled with the Kebabangan cluster gas fields, the completion of the Sabah Oil and Gas Terminal and the Sabah-Sarawak (Kimanis-Bintulu) gas pipeline project would position Labuan and Sabah as one of the leading O&G hubs in the region.

"Clearly the era of 'easy oil' is over and the exploration and production of O&G will move increasingly into deeper waters, presenting us new challenges as well as opportunities," Muhyiddin said.

However, besides location, a regional hub demands one-stop centres with fully integratedport facilities, warehouses, workshops, ship maintainance and fabrication yards, Muhyiddin said, adding that this is where the partnership between Asian Supply Base and Labuan Shipyard is timely.

Read more: DPM: Malaysia can be come global deepwater oil, gas hub http://www.btimes.com.my/Current_News/BTIMES/articles/dpm22/Article/index_html#ixzz0uSS6JOqU




This news is positive for this company below.  Its CEO expressed optimism and has hinted on these developments in his annual report.

Oil & gas sector ripe for upward re-rating

Oil & gas sector ripe for upward re-rating

Tags: Alam Maritim Resources Bhd | Barrow Island | Chevron Corp | enhanced oil recovery | EOR | Exxon Mobil Corp | Gorgon project | Handal Resources Bhd | Jason Yap | Kencana Petroleum Bhd | liquefied natural gas | LNG | O&G | oil and gas sector | OSK Research Sdn Bhd | Petra Group | Petroliam Nasional Bhd | Petronas | Royal Dutch Shell plc | Tanjung Offshore Bhd | Wah Seong Corp Bhd

Written by Chong Jin Hun
Tuesday, 06 October 2009 22:46

KUALA LUMPUR: The Malaysian oil and gas (O&G) sector could be ripe for an upward re-rating in anticipation of support services firms being awarded new contracts by oil majors as demand for crude oil recovers amid an improving global economic landscape.

Valuations for O&G support services firms are deemed attractive at current prices, according to OSK Research Sdn Bhd analyst Jason Yap. He noted that average sector valuations are trading below a price-to-earnings ratio (PER) of 10 times financial year 2010 earnings, compared with a historical PER of between 18 and 20 times.

"Once the tap is turned on and contracts start to flow, the future earnings of local supporting O&G companies would be upgraded and a fundamental upward re-rating on the sector would follow.

"There has been no major O&G contract award in the past one year and we believe these are due anytime now," Yap wrote in a note to clients yesterday.

Yap, who likes O&G firms like ALAM MARITIM RESOURCES BHD [], KENCANA PETROLEUM BHD [] and Wah Seong Corp Bhd, is retaining his outperform call on the sector.

The industry is deemed fairly valued at a higher PER of 11 times, an upgrade from the nine times estimated earlier. The upward revision is in anticipation of new jobs in the pipeline.

O&G support services include fabrication of O&G facilities, pipe coating, installation of pipeline and facilities, engineering, procurement and CONSTRUCTION [] and provision of offshore supply vessels (OSV).

Several global large-scale projects involving local companies are worth noting. These include Australia's Gorgon liquefied natural gas (LNG) project, which includes the construction of an LNG facility with an annual capacity of some 15 million tonnes on Barrow Island, off Western Australia.

The Gorgon LNG initiative, one of the world's largest, is a collaboration among three oil majors — Chevron Corp, Exxon Mobil Corp and Royal Dutch Shell plc. Based on news reports, the initial phase of the project is valued at some A$43 billion (RM132.69 billion).

Malaysian entities including process equipment maker KNM GROUP BHD [] and pipe-coating specialist Wah Seong are among bidders for the job, Yap said, quoting sources.

In Malaysia, Exxon Mobil and Petroliam Nasional Bhd (Petronas) had signed a production-sharing contract to develop seven existing oil fields off the peninsula. These include the Seligi, Guntong, Tapis, Semangkok, Irong Barat, Tabu and Palas fields, which are mostly off the coast of Terengganu.

Both parties had agreed to spend at least US$2.1 billion (RM7.22 billion) on major enhanced oil recovery (EOR) operations, rejuvenation of facilities and further development and drilling activities in the fields.

OSK said potential beneficiaries of the project included OSV players like Alam Maritim, Petra Group and TANJUNG OFFSHORE BHD [], besides crane manufacturer Handal Resources Bhd.

Oil sands projects, which involve companies like KNM, are an area to watch as oil prices gained momentum.

"With oil prices building a new base at US$70 a barrel, we believe it would be a matter of time before oil sands projects, which were previously abandoned owing to unfavourable oil price, are revived," said Yap.

Crude oil prices have more than doubled to US$70 a barrel from about US$30 a barrel early this year. The commodity almost touched US$150 a barrel in the middle of last year. OSK estimated that the commodity would be transacted at between US$70 and US$80 a barrel next year.

"We believe crude oil prices should go up in 2010 in line with a better global economic outlook and spur the award of new O&G projects," Yap said.

While a rise in crude oil prices was often associated with the weakness of the US dollar, Yap said the major driver of crude prices was an anticipation of a recovery in the global economy and higher demand for the hydrocarbon resource.

"Also, there is a very real possibility of a scarcity of oil supply starting from the next few years since most of the oil majors have been holding back the bulk of their capex on new O&G projects in the past one year," Yap said.