not vested
UMW OIL & GAS CORP BHD
By Maybank IB Research
Buy (unchanged)
Target Price: RM5.15
UMW Oil & Gas Corp Bhd’s jack-up drilling rigs Naga 7 and Naga 8 are on track to meet delivery schedule, said Maybank IB Research.
It said UMW-OG’s most recent newbuild jack-up drilling rig Naga 6 had met the delivery schedule and had already secured a charter contract from national oil companies.
This, it added, vindicated the company’s move to buy this China-build rig. It noted Naga 6, which was built by China Merchants Heavy Industry (Shenzen) Co Ltd, did not face any delay setback or cost overruns.
Maybank IB said the rig shared similar specifications with Naga 2 and Naga 3 rigs, which ensured a more equitable cost management for its fleet of rigs.
The research house said Naga 7, which was also being built by China Merchant, was on track to meeting its delivery deadline in December and had secured a contract (commencing in January 2014) prior to delivery.
“Naga 8, being built at Keppel’s yard, is already 57% completed and should be ready for delivery in September 2015,” it added.
Maybank IB also noted that UMW-OG had also successfully secured charter extensions for Naga 2 and Naga 3 to 2015 at similar rates.
All in, the group’s order backlog stood at RM1.48bil as at August 2014. Maybank IB maintained its “buy” call on UMW-OG with target price of RM5.15 at 23 times 2015 price-earnings ratio.
Source: The Star