Excerpts from analysts' reports

UOB KH maintains 'buy' rating on REX International after non-commercial hydrocarbons found in Oman well

Analyst: Loke Chunying

 ·Non-commercial hydrocarbons have been discovered in the exploration well, Masirah North North #1 (MNN#1). MNN#1 is part of a 2-well drilling program in Oman.

manslidgren.8.13aMans Lidgren, CEO of Rex International. NextInsight file photoThe non-commerciality of the oil well could be due to many possibilities such as low pressure at reservoir, oil being too viscous or too heavy etc.

Nonetheless, datasets acquired from the coring and logging programmes of the first well will give engineers a better understanding of the Oman prospect, and will aid in the identification of the second exploration well.

Subject to the approval of the Omani government, drilling at Oman is anticipated to commence again within the next 2 weeks.

Through its stake in Lime, Rex has a 41.6% effective participating interest in the Oman concession. The Oman concession is a key asset of Rex and forms almost 2/3 of our valuation.

·Putting things in perspective. Over the past 2 years, Rex Technology has been tried and tested across North Energy’s 59 prospects.

Of the 41 wells that were drilled, 35 predictions were forecasted accurately (85% success rate).

Of the 16 wells that were predicted positive using Rex Technology, 11 had been drilled with commercial oil (69% accuracy).    

16 predicted positive – 11 drilled with commercial oil (69% accuracy)  25 predicted negative—24 were dry (96% accuracy)  

Maintain BUY and target price of S$1.27. While the oil in the first exploration well is not commercially viable, all is not lost as the presence of hydrocarbons (oil) still underpins Rex’s claims in its ability to find oil.

It is important for investors to look at 1 or 2 more well drilling as a more accurate representation of the effectiveness of Rex’s Technology.

Rex will be drilling 5 to 7 onshore well in its concessions in Trinidad & Tobago in 2014, with the first drilling to be carried out in 1Q2014. Drilling at Oman is anticipated to also commence again within 2 weeks.


For what Rex has to say, see its press release issued today on the SGX website.

Recent story: REX: Kick-starts Unprecedented Drilling Campaign with Oman Well Spud



UOB KH recommends entry level of 70-c and below for COSCO

cosco_chrt12.13Chart: BloombbergWe estimate year-to-date contract wins at US$3b, surpassing our projection of US$2.5b. 

We raise our 2014-15 net profit forecasts by 7-13% on higher contract win assumptions of US$3.0b each for 2013 and 2014 (previously US$2.5b).

Improved dry-bulk shipping sentiments, if continue throughout 2014, could spark a new dry-bulk shipbuilding cycle.
 
Poor earnings (as a result of cost provisions) are currently dampening share price upside. 

Maintain HOLD. Target price: S$0.85. Entry price: S$0.70.

We continue to prefer YZJ (YZJ SP/ BUY/Target: S$1.39) over COSCO (S) as the beginning of a new shipbuilding cycle is expected to benefit stronger Chinese yards first. 

YZJ has an excellent track record in execution. Accumulate on dips. 

For COSCO (S), we recommend an entry level of S$0.70 and below. Current share price is partially buoyed by positive sentiments on dry-bulk shipping related stocks on the back of a seasonally high BDI.

We expect a seasonal correction in the BDI in the near term to a trough level in end-January/early-February during the Chinese New Year holidays.


Recent story:  DEUTSCHE's top picks for 2014: ComfortDelGro, Genting, Yangzijiang, DBS, Golden Agri


You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings2.760-0.050
Avi-Tech Electronics0.265-
Best World1.8000.010
Broadway Ind0.086-0.001
China Sunsine0.390-
ComfortDelGro1.390-0.010
Delfi Limited1.0500.010
Food Empire1.4200.020
Fortress Minerals0.2700.020
Geo Energy Res0.390-0.005
GSS Energy0.027-0.002
Hong Leong Finance2.560-
Hongkong Land (USD)3.270-0.060
InnoTek0.4350.005
ISDN Holdings0.340-0.005
ISOTeam0.035-
IX Biopharma0.041-0.005
Jiutian Chemical0.025-
KSH Holdings0.2500.005
Leader Env0.050-0.003
Medtecs Intl0.135-0.004
Nordic Group0.345-0.005
Oxley Holdings0.093-
REX International0.121-0.003
Riverstone0.745-
Sinostar PEC0.137-0.002
Southern Alliance Mining0.605-
Straco Corp.0.515-0.010
Sunpower Group0.215-
The Trendlines0.085-
Totm Technologies0.024-0.002
Uni-Asia Group0.840-0.010
Wilmar Intl3.390-0.020
Yangzijiang Shipbldg1.660-0.030
 

We have 1991 guests and no members online

rss_2 NextInsight - Latest News