Petra ... Jun11

It has moved a step closer to playing a part in Petronas’s development of marginal oilfields.

It signed a MOU with Labuan Shipyard & Engineering Sdn Bhd to utilize Labuan Shipyard’s facilities at Victoria Harbour, Labuan for its fabrication activities. Under the MOU, the two parties may also explore areas for cooperation to collaborate on projects pertaining to leasing of fabrication yards, fabrication works and storage facilities.

Observers sat it was an ordinary business arrangement that allows Petra Energy to lease the required yard space to support its RM400m Petronas Carigali HUC work at a stable, pre-agreed rental rate.

Petra Energy will join a consortium to bid for a marginal oilfield development contract by Petronas in Sabah and Sarawak.

They are targeting a strategic partner for the development of marginal oilfields. They are looking for a foreign partner to do the design, preferably on from Europe or Australia.

Its target is to have everything ready by 3Q2011. It will be well prepared for the planning during the final quarter and ready for marginal oilfield development in Jan 2012.

Petra Energy is 29.55% owned by offshore support services outfit Petra Perdana and 30% owned by Sarawak businessman Datuk Bustari Yusuf.

Even if it loses the bid for the development job, Petra Energy would still benefit from sub contracts handed out by the winning bidder.

Its fundraising exercise could be slated for 2H2011 to beef up Petra Energy’s capital base, enhance its working capital and reduce its borrowing costs.

The company has rm900 million in unbilled sales, which will provide visible contract billings for the next two years.

Its current order book includes the rm400 million hook up and commissioning job awarded by Petronas Carigali Sdn Bhd in Dec 2010.

The company returns to the black in 1QFY2011 ended March 31 after it completed its kitchen sinking exercise in Dec 2010.

Given that all the kitchen sinking activities were completed in 4QFY2010, expect the company to deliver a more stable performance in the coming quarters, especially after securing the rm400 million hook up and commissioning job from Petronas Carigali in Dec 2010.

However, marginal oilfield development is a high risk high return job. Will Petra Energy which specializes in vessel chartering and HUC activities be able to climb the value chain to participate in upstream exploration and production?