Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Saturday, December 10, 2011

SapuraCrest Kencana eyes lucrative overseas deals

The upcoming merged entity is bidding for multi-billion ringgit worth of oil and gas jobs stretching from Malaysia to Brazil.

SapuraCrest Kencana Petroleum Bhd, the upcoming merged entity between Malaysia’s two largest oil and gas (O&G) players, is eyeing more international projects, especially in Australia and Brazil, to boost its already fat order book of RM13 billion.

SapuraCrest Petroleum Bhd executive vicechairman and president, Datuk Seri Shahril Shamsuddin, said the company and Kencana Petroleum Bhd were bidding for multi-billion ringgit worth of O&G jobs stretching from Malaysia to Brazil.

“There is a lot of work coming out of Australia and Brazil is also another country that you can’t ignore. India is also heating up with new investments in oilfields.

“In the longer term, we will look at the Gulf of Mexico. As a merged entity, we can take on more jobs and bid for larger projects,” Shahril said in an interview with Business Times yesterday.

Also present was Kencana Petroleum Bhd’schief executive officer Datuk Mokhzani Mahathir.

SapuraCrest last month won a US$1.4 billion (RM4.4 billion) contract from Petroleo Brasileiro SA (Petrobras), Latin America’s largest company, to charter and operate three units of pipe-laying support vessels.

Kencana, on the other hand, announced yesterday that it won a RM1 billion contract to help build a liquefied natural gas processing facility in Australia, awarded by United States-based Bechtel International Inc.

Shahril said SapuraCrest Kencana, which will be the world’s fourth largest O&G service provider by market capitalisation upon merging, aimed to grow its revenue by 15 to 20 per cent per annum.

“Currently, our combined revenue is between RM5 billion and RM5.5 billion a year and we are confident to increase that year-onyear,” Shahril said.

On whether the new merged entity will embark on an acquisition trail, Shahril said if there were companies that could help mitigate risk or enable SapuraCrest Kencana to do projects at low cost, it would consider the options available.

The acquisitions may include buying engineering firms or those involved in specialised areas.

SapuraCrest and Kencana are merging in a deal worth RM11.85 billion to create the largest O&G service provider by asset in the country.

Under their cash and share swap deal, special purpose vehicle Integral Key Sdn Bhd will buy all the assets and liabilities of SapuraCrest for RM5.87 billion and Kencana for RM5.98 billion.

The companies are obtaining shareholders' approval at their respective extraordinary meetings on December 14 and December 15.

The exercise is scheduled to be completed by first quarter 2012.

Read more: SapuraCrest Kencana eyes lucrative overseas deals

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