SapuraCrest-Kencana plans RM1.4b capex for expansion over 2 yrs

KUALA LUMPUR: SAPURACREST PETROLEUM BHD [] has received overwhelming support from its shareholders for the proposed merger with KENCANA PETROLEUM BHD [] during the EGM on Wednesday.

SapuraCrest group president and chief executive officer Datuk Seri Shahril Shamsuddin said the merged entity would allocate RM1.4 billion as capital expenditure over the next two years.

The capex would be used to expansion into Australia, Brazil and the Middle East, he said a media briefing. The merged entity will have an order book of about RM13 billion upon the merger, he added.

Shahril said the merger will create a fully integrated oil and gas services group, which will rank among the top five globally.

SapuraCrest also receivedshareholder's'' approval for the proposed acquisition of Clough Ltd's marine CONSTRUCTION [] and offshore engineering operations in Australia, the UK, and the US for a total consideration of RM409 million. This would enable SapuraCrest to establish its presence in Australia.

OSK Research ups Kencana TP to RM3.17

KUALA LUMPUR: OSK Research has upgraded KENCANA PETROLEUM BHD [] to Buy with revised fair value of RM3.17.

The research house said on Monday, May 16, it viewed positively Kencana's plan to acquire Allied Marine & Equipment Sdn Bhd for RM400m from Worldclass Inspiration Sdn Bhd and Allied Asset Holdings Sdn Bhd.

OSK Research said the purchase would be satisfied by the issuance of 149.3m new shares of Kencana at RM2.68 a share.

'This acquisition also comes with a profit guarantee of RM40m. The entire exercise is expected to be completed by 3QCY11.

'We view this acquisition positively as it would help Kencana to expand vertically. Upgrade to Buy with revised fair value of RM3.17,' it said.

Kencana Petroluem in RM400m acquisition of offshore services-based Allied Marine

KUALA LUMPUR: Kencana Petroleum Group Bhd is buying Allied Marine & Equipment Sdn Bhd (AME) for RM400 million in its move to become a fully integrated offshore services player.

The company said on Friday, May 13 the purchase of AME would be a share swap, where it would issue 149.25 million new Kencana shares at RM2.68 a share. The vendors of AME are Worldclass Inspiration Sdn Bhd and Allied Asset Holdings Sdn Bhd.

It said AME provides offshore diving and underwater related services for inspection, repair and maintenance of structures, pipelines and risers and for the CONSTRUCTION [] of underwater facilities for the oil and gas industry.

'The proposed acquisition will also enable Kencana to recognise in full the earnings stream and cash flows that is expected to be generated by AME. The proposed acquisition is expected to expand Kencana's recurring revenues with higher margins being earned.

'There are also potential cost synergies for Kencana with the possibility of AME group providing services to Kencana's in-house subsea services requirements apart from savings on general and administration overheads,' it said.

Kencana said AME has the capability to provide a wide range of sub-sea services for the oil and gas industry. For the past three years, apart from Malaysia, AME had also undertaken various projects for multinational oil and gas players in Indonesia, Vietnam, China and India.

The vendors guaranteed to Kencana Petroleum that AME's audited consolidated profit after tax'' for each of the financial years ending Sept 30, 2011 and Sept 30, 2012 shall not be less than RM40 million.

Kencana orderbook at RM2.44b, gets RM250m contract from Sarawak Shell

KUALA LUMPUR: KENCANA PETROLEUM BHD []'s total order book increased to RM2.44 billion after it was recently awarded a RM250 million contract from Sarawak Shell Bhd.

Bernama reported on Friday, May 13 the latest contract secured by its unit, Kencana HL Sdn Bhd, was to fabricate two gas compression modules for a platform in the West Natuna gas field.

The modules were for the E11P-B Platform, which is one of the platforms in the E11 Hub complex and were scheduled to be delivered and installed in the first quarter of 2012.

Bernama reported the company as saying the deal would increase its total outstanding order book to RM2.44 billion, with Kencana HL contributing RM1.441 billion.

OSK Research maintains Trading Buy on Kencana, unch TP RM3.05

KUALA LUMPUR: OSK Research is maintaining its Trading Buy on Kencana Petroleum while its target price remains unchanged at RM3.05, based on the existing PER of 23x FY12 EPS.

It said on Wednesday, March 30 that Kencana remains one of its top picks for the O&G sector with its impressive delivery track record.

Kencana's unit had secured a'' RM216 million contract from Petrofac Malaysia Ltd for the CONSTRUCTION [] of well head platforms for the Cendor oil field off the coast of Terengganu.

'Given that Kencana already has a tie-up with Petrofac on the Berantai field and also recently secured some jobs for the Sepat field, we are not surprised that Petrofac has again awarded to it the EPC job for the Cendor oil field, as long as Kencana has the capacity and manpower to undertake the job.

'We understand that Kencana's current utilisation rate is slightly above 60%. Also, we think Petrofac would prefer

Kencana over its other peers since the latter has worked on several projects with the multinational company and is well-versed with its requirements,' it said.

OSK Research said there was no change to its FY11-12 earnings as it had earlier assumed this orderbook replenishment for the company. This new contract will boost Kencana's orderbook to RM2.2bn, which should keep the company busy for the next 1.5 years.

Kencana up on RM216m Petrofac job

KUALA LUMPUR: KENCANA PETROLEUM BHD [] shares rose on Wednesday, March 30 after it secured a RM216 million contract from Petrofac Malaysia Ltd for the CONSTRUCTION [] of well head platforms for the Cendor oil field off the coast of Terengganu.

At 9.15am, Kencana was up seven sen to RM2.65 with 2.26 million shares done.

Kencana said on Tuesday, March 29 that its unit Kencana HL Sdn Bhd would undertake the engineering, procurement and construction of two units wellhead platforms''for the Cendor Phase 2 Development Project.

It said the contract was a one-off construction contract and expected to be completed within the second quarter of 2012.

Kencana said the contract was expected to contribute positively to its earnings for the financial years ending July 31, 2011 and 2012.