Malaysia: Oil and gas shares back on investors’ radarby Intan Farhana Zainul
This week, several O&G service providers made into the top volume list, as the price of oil heads for its third weekly gain.
Counters such as
Petra Energy Bhd, Sapura Energy Bhd, Carimin Petroleum Bhd, Deleum Bhd
and Dayang Enterprise Holdings Bhd have been on the uptrend since September on the anticipation of more projects for the industry.
Interestingly, financially troubled O&G companies such as
Alam Maritim Resources Bhd
and Perisai Petroleum Technologi Bhd are also seeing traction in their share price movement.
Both companies are currently in the midst of restructuring their debts.
Shares in Alam Maritim rose 31% to 21 sen since the beginning of the year, while Perisai is up 37% to 5.5 sen this week.
“All the negativity in the sector has been priced in and we believe that the sector has reached its bottom,” says a broker.
Also, there is talk in the market that there are potential maintenance contracts worth
RM6bil that will be dished out by Petroliam Nasional Bhd (Petronas).
According to sources, the maintenance, construction, and modification (MCM) contracts by the national oil company have been long overdue.
“There has been pre-award meeting by Petronas with five to six shortlisted candidates for MCM jobs throughout Malaysia including in Sabah and Sarawak,” a source says. These contracts are typically meant for Petronas rigs that extract oil and gas.
Meanwhile, Maybank IB Research reckons that the O&G sector has bottomed out and is on a cyclical recovery.
It adds that the Petronas’ RM60bil capex commitment for 2017 is positive and the sector is slowly seeing a revival in upstream activities, such as drilling work.
Contrarian views
“There are still not enough signs of investment beginning to return, and that raises the risk of tightening of the market in the next five years and a risk to the stability of oil prices,” Neil Atkinson, head of the IEA’s oil markets and industry division, said recently at a conference in Bahrain.
Some local equity analysts remain bearish on the overall outlook of the sector and they are
more upbeat about the prospects of downstream companies.The downstream sector of the O&G industry involves the refining of crude oil and natural gas, as well as marketing and distribution of products from crude oil and natural gas.
Source: The Star
http://www.thestar.com.my/business/busi ... AxgXS8t.99
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