Tuesday, September 15, 2009

Oil & Gas OSK

I like O&G stock.. it stand about 30% of my portfolio. my top pick is SEALINK ... About 47 of my portfolio is under construction my top pick is SP-Setia and BDRB-WA..do you see what i see?



The Star’s online report yesterday said Chevron has announced that the Gorgon gas project
has been approved and will be developed off northwest Australia. Chevron will partner with
ExxonMobil and Royal Dutch Shell to develop the gas field. The report also said the project
has appeared to be more certain after PetroChina agreed to buy 2.25m tonnes of LNG p.a.
from the gas field.
Project background. We understand from our sources that the entire project is worth about
AUS$50bn, with estimated resources of about 40 trillion cubic feet of LNG, which is enough to
power a city of 1m people for the next 800 years. Chevron will be the main operator of the
project with a 50% stake, followed by ExxonMobil and Shell, with each holding 25%
respectively. These oil majors will build a plant which will include 3 production trains, a gas
plant and an established international shipping facility. We understood earlier that the Federal
Government has approved the project on the Barrow Island nature reserve, off west Australia,
but approval will be subject to conditions on managing and protecting local fauna, especially
the endangered flatback turtle.
Approval is good news for Malaysian companies too. We believe the main beneficiaries
will include Wah Seong and KNM, which have put in their bids for jobs in the Gorgon project.
We understand that Wah Seong stands a very good chance of winning at least part of the
pipe coating jobs since it is one of the two main bidders for the project, other than Bredero
Shaw. As for KNM, we understand from the company’s management that it too is bidding for
higher-end process equipment jobs. The group has significant presence in Australia through
its subsidiary, KPL. Maintain Buy on Wah Seong (TP: RM2.78) based on a PER of 12x FY10
EPS) and KNM (TP: RM1.01), based on PER of 10x FY10 EPS).

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