KUALA LUMPUR: Domestic oil and gas (O&G) activities across the services value chain is expected to be on the rise based on activity outlook report released by Petroliam Nasional Bhd (Petronas).
Maybank Investment Bank Bhd (Maybank Investment) said Velesto Energy Bhd, Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) and offshore support vessels (OSV) players such as Icon Offshore Bhd and Alam Maritim Resources Bhd will stand to gain the most from the improving domestic landscape.
“We are encouraged by the majority of domestic O&G activities across the services value chain will be on the rise. This is premised on Petronas’ latest activity outlook (2019-21) report as compared to its 2018-20 issue a year ago.
“We see Velesto, MMHE and OSV players (Icon, Alam) as key beneficiaries from the improving domestic landscape. While that denotes improved utilisation for the services providers, day-rates will be flattish, in our view,” it said in its note today.
The firm said its key “buy” recommendations are Dialog Group Bhd and Yinson Holdings Bhd.
The bank-backed research firm further said Petronas’ drilling and offshore support vessels (OSV) activities offshore Malaysia reflect a rise in asset utilisation across the board.
“The respective offshore fabrication, linepipes, offshore installation and hook-up & commissioning (HUC)/ maintenance, construction & modification (MCM) segments will also see increase of workflows in 2019-21.
“However, activities for the floaters segment will be relatively unchanged over the next 3 years. This round, Petronas added a new segment - underwater services.
“We posit MMHE to be a major recipient from the rise in fabrication activities in Malaysia, as a leading contender for the multi-billion central processing platform job (Kasawari) for 2019. This is a positive to its orders replenishment. Petronas’ drilling programs validate our “buy” call on Velesto,” it added.
”While the likes of Barakah Offshore Petroleum Bhd and OSV players such as Icon Offshore and Alam Maritim will also benefit from the improving prospects in HUCs, MCMs, offshore installation, underwater services and OSV activities, this catalyst will be negated by their immediate priority to restructure or refinance their debts.
“Drilling activities offshore Malaysia will be on the rise, based on the units of assets required for 2019 to 2020, on a year-on-year basis. The number of units includes rigs requirement during well abandonment activity. The outlook numbers are based on fullyear utilisation.
“OSVs utilisation for AHTS, PSVs & SSVs and FCBs vessels is not unexpected, for it runs in tangent with Petronas’recent roll-out of its integrated logistics control tower (ILCT) project,” said the firm.
The offshore fabrication activities Malaysia are also seeing a progressive rise in projects partly due to the delay in the execution of several projects that would be carried forward to 2019 to 2021 such as the Limbayong floating production, storage, and offloading (FPSO).
“The numbers of floating offshore facilities (floaters) activities are unchanged. Award timeline-wise, the floater requiring the Panamax-size vessel has been delayed by a year. The invitation to bid (ITB) for the Limbayong FPSO has started.
”Yinson, Bumi Armada Bhd and MISC Bhd are likely to bid for this project. Putting into perspective, the low activities for floaters in Malaysia are not unexpected. Majority of the tenders are in Africa and Latin America,” it added.