Sector Summary Table (Rig operator)
| Company |
Rec |
Price
|
TP |
EPS (sen) |
EPS Grth (%) |
PE (x) |
DPS (sen) |
Yield (%) |
PBV (x) |
| |
|
(RM) |
(RM) |
09F |
10F |
09F |
10F |
09F |
10F |
09F |
10F |
09F |
10F |
09F |
| SapCrest |
Buy |
1.67 |
1.75 |
9.8 |
10.3 |
31.1 |
4.7 |
16.4 |
15.7 |
5.0 |
5.0 |
3.1 |
3.1 |
2.0 |
| Tj. Offshore |
Hold |
1.40 |
1.40 |
15.6 |
19.2 |
5.0 |
22.6 |
9.0 |
7.3 |
6.0 |
6.0 |
4.3 |
4.3 |
1.0 |
| UMW |
Hold |
6.05 |
5.45 |
28.4 |
41.2 |
(45.4) |
45.3 |
21.8 |
15.0 |
19.7 |
27.8 |
3.2 |
4.6 |
1.7 |
| Kencana |
NR |
1.84 |
NA |
13.2 |
12.7 |
39.4 |
(4.3) |
13.5 |
14.1 |
NA |
NA |
NA |
NA |
4.1 |
| Source: Maybank-IB |
Rig market faces challenging outlook
Falling utilization, a totally different scenario from 1-2 years ago. Global drilling activities have decreased in the wake of the 21% YoY
cut in E&P spending for 2009 and 2-3% YoY fall in global oil production
in 2009. Consequently, the number of rigs working has also fallen. The
global utilization rate for rigs is at just 76.9% now, well below the
average of above-90% in 2007-08.
Global rig market
| |
Work |
Yard |
Idle |
Laid-up |
Total |
Utilization
rate |
| |
|
|
Ready-stacked |
Cold-Stacked |
|
(%) |
| Drillship |
35 |
1 |
0 |
0 |
36 |
97.2 |
| Semisub |
130 |
4 |
4 |
3 |
141 |
92.2 |
| Jackup |
315 |
27 |
68 |
36 |
446 |
70.6 |
| Tenders |
23 |
4 |
4 |
0 |
31 |
74.2 |
| Total |
503 |
36 |
76 |
39 |
654 |
76.9 |
| Sources: Various, Maybank-IB |
Order cancellation and sub-letting are common today. Of the 654
rigs in the global market, only 503 rigs are drilling at the moment. 76
rigs are ready-stacked, 39 units are cold-stacked whilst 36 are at the
shipyards. Meanwhile, two other rigs under construction have been
cancelled due to lack of financing. In light of falling drilling activities,
more and more oil companies are in negotiations to sub-let rigs as part
of their efforts to cut costs.
| Definition snapshot |
| Work |
Rig that is crewed and drilling |
| Yard |
Rig that is currently in the yard for repair and maintenance
work. |
| Ready-stacked |
Rig that is not active but is capable of being put to work in
less than 48 hours and does not require spending in excess
of USD50,000 to activate. Has minimal crew assigned. |
| Cold-stacked |
Rig that is not active. Does not have crew assigned. Requires
maintenance review before it can function as a drilling rig. |
| Sources: Various, Maybank-IB |
Newbuilds will raise capacity by 24%. Exacerbating the situation, a
significant number of rigs will enter the market from 2009. 38 new rigs
are planned for delivery in 2009, 62 in 2010, 46 in 2011 and 11 in 2012,
raising the total fleet size by 24% to 811 units by end-2012.
29% of newbuilds are uncontracted; a major concern.Of the 157
newbuilds entering the market in 2009-12, 45 rigs are without contracts,
which is a major concern. Several prospects have seen contracts
cancelled and the trend is likely to continue.
| Newbuilds by types |
| |
2009 |
2010 |
2011 |
2012 |
Total |
| Drillship |
4 |
15 |
18 |
5 |
42 |
| Semisub |
12 |
16 |
11 |
6 |
45 |
| Jackup |
20 |
27 |
16 |
0 |
63 |
| Tenders |
2 |
4 |
1 |
0 |
7 |
| Total |
38 |
62 |
46 |
11 |
157 |
| Sources: Various, Maybank-IB |
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