PETALING JAYA: Analysts are positive on Dagang Nexchange Bhd
’s (Dnex) latest development, where its 90%-owned Ping Petroleum has entered into two contracts.
These are for the development and production of the Meranti Cluster with Petroliam Nasional Bhd (PETRONAS) and Duta Marine Sdn Bhd, and for the development and production of A Cluster with PETRONAS and Petroleum Sarawak Exploration and Production Sdn Bhd.
Ping’s net participating interest for both the Meranti Cluster and A Cluster will be at 60% and 70%.
Both the Meranti Cluster and A Cluster are estimated to produce its first oil in 2024 and 2027, respectively, Hong Leong Investment Bank (HLIB) Research pointed out.
“We are positive on this development as the group ventures into more options to sustain/increase its crude oil productivity.
“We maintain our ‘buy’ call on Dnex with an unchanged target price of 93 sen per share,” it said.
In a report, the research house pointed out that the pre-development phase for both small-field asset clusters will take no more than two years.
“The estimated resource and capital expenditure allocation will be refined over the next few months as the asset evaluation is completed.
“As it is only at its preliminary phase, we are not able to estimate both clusters’ annual production yet and await more clarity from the group in the future. As of now, we gather that the preliminary works will not be revenue or earnings accretive,” it said.
HLIB Research said it was positive on this development as a whole, even as the group ventures into more options to sustain/increase its crude oil productivity.
It said research and forecast indicate that the group’s current Anasuria asset’s production would peak in 2026/2027.
“Alongside the greenfield Avalon project, which is expected to produce its first oil in mid-2025 (FY26), we think that this will diversify Ping Petroleum’s revenue streams and bring the group to greater heights in the next few years.”
At last look, shares in Dnex were at 61 sen apiece, valuing the whole group at some RM1.9bil.
