麦格理-亚太地区-石油与天然气行业-马来西亚石油与天然气：生产削减-2019.8.16-69页.pdf

Please refer to page 67 for important disclosures and analyst certification,or on our website August 2019 Malaysia EQUITIES Msia gross production:slowing(MMboe)Source:IHS Markit,August 2019 List cos production:2025 peak(MMboe)Source:IHS Markit,August 2019 Inside Production deduction 2 Petronas:Arresting production decline 3 Production runway for E&P companies 6 Positive medium-term offshore E&C outlook 11 Greenfield opportunities at home 12 Appendix 15 Dialog Group Bhd(DLG MK)16 Sapura Energy Bhd(SAPE MK)49 MacVisit:Hibiscus Petroleum Bhd 55 MacVisit:Reach Energy Bhd 61 Analysts Macquarie Capital Securities(Malaysia)Sdn.Bhd.Ben Shane Lim +6 03 2059 8868 Malaysia O&G Production deduction Key points Our proprietary analysis of IHS Markit data points to urgency for brownfield redevelopment to stem potential 34%domestic production decline by FY25.We see Dialog as the best brownfield play,with its strong balance sheet,track record and integrated solutions.Initiate with OP and RM3.80 TP.In contrast,there are Malaysian E&P companies 31%CAGR in entitled production led by SAPE.Offshore E&C outlook remains positive as well.Petronas:fending off production decline Our proprietary bottom-up analysis of IHS Markit data points to growing urgency for Petronas to stem the decline in Malaysian production by 2025,and by extension,defend government petroleum revenues.We expect emphasis will be placed on brownfield redevelopment in order to enhance recovery rates,while the pipeline of development and discovery assets cannot afford any delays.Malaysias gross production will peak in FY20/21 and fall 34%by FY25 as production assets mature,based on IHS Markit data.The decline in liquids will substantially outpace that in gas,with new developments being gas-focused.We do not expect appraisal/discovery assets to contribute substantially until FY25,and would have to make the unrealistic assumption of 100%appraisal/discovery asset conversion if production is to be assumed to sustain at 600MMboe/yr.The data suggests government take will fall 30%-34%by FY25 without intervention.Capex cant slow:We remain upbeat on medium-term offshore E&C activity,despite turning more bearish on oil(see Vikas Dwivedis latest Global O&G update).Based on the current development pipeline,non-exploration capex looks set for 35%CAGR till FY22 with the topside fabrication requirement alone registering 74%CAGR.Petronas cannot afford to take its foot off the capex pedal,or risk further production deceleration.The persisting capex requirement affirms our Petronas Monetisation thesis(see More pressure):1)increased payouts from listed subsidiaries(PChem/PetDag)and/or;2)stake sales.For brownfield,Dialog:We believe tank terminal infrastructure company Dialog is best positioned as a brownfield redevelopment play,with its strong balance sheet,solid track record,and integrated solutions.Initiate with OP(pg 16).Sapura best E&P play(OP,RM0.47 TP):SAPE offers the best project economics relative to reserve size among Malaysian E&P companies.SK408 production ramp-up as early as 4QCY19 will triple production.50%stake sale to OMV(US$1.6bn EV)lends strong confidence to timely execution and recovery rates.Reiterate E&P-led FY21 turnaround,with E&C upside(pg 49).Other ideas:E&P MacVisits HIBI(NR):The 50%stake the UKs North Sea Marigold asset cost US$37.5m or US$1.25/boe vs IHS Markit-estimated NPV of US$8.05/boe.Mgmt plans 15%stake sale to fund capex;balance 35%entitlement is estimated to double production by FY23,on top of 30%growth in existing brownfield production assets.REB(NR):IHS values REBs(60%stake)Emir Oil asset at US$558m-US$1bn or 3.2x-5.8x REBs estimate EV of US$170m.Mgmt guides 1Q19 breakeven on 4 new wells(at US$65/bbl oil),but cautions US$50m refinancing+US$25m ST capex requirement;cumulative US$310m required by FY23.05001,00020152040ProducingImproved rec.Enhanced rec.DevelopingAwait.dev.apprvlAppraisingDiscoveryWe are here05101520253020152040UZMADLGREBHIBISAPE+31%CAGRMacquarie Research Malaysia O&G 16 August 2019 2 Production deduction Malaysian production set to decline We expect an increased urgency for Petronas to stem the decline in Malaysian production.This includes expediting greenfield developments as well as enhances/improved production for aging assets.Based on IHS Markit data,the existing pipeline of development assets will be insufficient to arrest the decline in gross revenues and government take.This is partly because gas is the primary resource for the pipeline of development assets.Greenfield interest has also been lacklustre:only two of nine blocks of the 2018 offering have been contracted(24%of km2 take-up),while the bidding deadlines for 2019 block offer had to be extended(pg 14).Note,Petronas overall revenue entitlements should remain relatively stable with the help of non-Malaysian entitlements(pg 4).Fig 1 Government take headed for rapid decline Fig 2 Falling liquid revenues(gross)the main driver Source:IHS Markit,August 2019 Source:IHS Markit,August 2019 E&P companies have solid production runway In stark contrast,Malaysian E&P companies face a different outlook with+31%CAGR in production expected.SAPEs production growth is domestic,while HIBI and REBs will be driven by UK/Kazakhstan production respective.Fig 3 Gross production outlook Fig 4 Relative share price performance vs Brent Source:IHS Markit,August 2019 Source:Bloomberg,August 2019 02,0004,0006,0008,00010,00012,00014,00016,0002019202020212022202320242025202620272028202920302031203220332034203520362037203820392040US$mProducingImproved recoveryEnhanced recoveryDevelopingAwaiting dev.approvalAppraisingDiscovery-31%06505,00010,00015,00020,00025,00030,0002019202020212022202320242025202620272028202920302031203220332034203520362037203820392040US$US$mLiquid revenueGas revenueGas price per Mcf assumption(RHS)Oil price per bbl assumption(RHS)05101520253020152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040SAPEHIBIREBDLGUZMA+31%CAGR-20 40 60 80 100 120 140 160 180 200Oct 17Apr 18Oct 18Apr 19Factor 100BrentSAPEDLGHIBIREBUZMAE&P companies expect production to rise,but Petronas will be battling production decline in Malaysia Macquarie Research Malaysia O&G 16 August 2019 3 Petronas:Arresting production decline Malaysias production is expected to peak in FY20/FY21(Fig 5)as a number of improved recovery assets begin a sharp decline(-42%by FY25),exacerbating the decline in producing assets(-31%by FY25).Based on the current trajectory of producing and development assets,Malaysian production is on course for sustained multi-year declines in production starting from FY21.The only way to sustain production at 600MMBOE,would be a 100%conversion of all discovery and appraised assets,which is highly unlikely.Notably,Petronas will aim to offset this decline with non-Malaysian production(pg 4).Fig 5 Malaysia production outlook See appendix for definitions Source:IHS Markit,August 2019 Gross revenue decline:-32%by 2025(Fig 2):The immediate production decline pressure stems from liquids(as opposed to gas),since the bulk of the new development assets incoming are primarily gas-producing.Based on production and development assets alone,gross liquid revenues are expected to fall 48%from FY20 to FY25,while gas revenues will fall 11%.Overall gross revenue will decline 32%in the same period,according to IHS Markit data.Government take:-34%by FY25(Fig 1):In turn,we see massive pressure on the governments share of revenues,which is projected to fall 34%in from FY20 to FY25,based on producing and development assets alone.Even including assets awaiting approval,under appraisal and discovery assets,the decline is only slowed to-31%.Fig 6 Development assets:gross production Fig 7 Development assets:gross revenue(US$65/bbl)Source:IHS Markit,August 2019 Source:IHS Markit,August 2019 010020030040050060070080020102012201420162018202020222024202620282030203220342036203820402042204420462048205020522054MMboeProducingImproved rec.Enhanced rec.DevelopingAwait.dev.apprvlAppraisingDiscovery-31%-42%020406080100120140201520162017201820192020202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044MMboePM-315SK-408Block H-RotanSK-320Block H05001,0001,5002,0002,5003,0003,5004,00020192020202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044US$mGasLiquidsFalling liquid revenues,and a primarily gas development pipeline is driving a-34%decline in government take over FY20-FY25.Macquarie Research Malaysia O&G 16 August 2019 4 Saved by foreign production We also note that Petronas has been active in pursuing foreign assets to beef up entitled production.Of course,these assets will contribute substantially less to government take.Despite a sharp fall in Malaysian production and revenues,Petronass overall entitlement revenue will face an average annual decline of only-1%(starting FY21 onwards)due to the stronger overseas production.Of course,due to local royalties,overseas assets production generate relatively lower entitlement revenues.That said,we should be cautious on these assumptions as the bulk of Petronas non-Malaysian revenues will come from the Canadain fact from a single project,the Montney BC-Frontier Wet Gas project.Fig 8 Petronas global gross production:by country Fig 9 Petronas global entitled production:by country Source:IHS Markit,August 2019 Source:IHS Markit,August 2019 Fig 10 Petronas global entitlement revenue:by country Fig 11 Petronas global entitled production:by status Source:IHS Markit,August 2019 Source:IHS Markit,August 2019 -100 200 300 400 500 600 700 80020152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040MMboeOthersMalaysia/Thailand JDAAzerbaijanTurkmenistanIraqCanadaMalaysiawe are here-100 200 300 400 500 60020152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040MMboeOthersMalaysia/Thailand JDAAzerbaijanTurkmenistanIraqCanadaMalaysiawe are here-2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,0002019202020212022202320242025202620272028202920302031203220332034203520362037203820392040US$mOthersMalaysia/Thailand JDAAzerbaijanTurkmenistanIraqCanadaMalaysiaMalaysian revenues in declineOverseas revenues offset decline-100 200 300 400 500 60020152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040MMboeProducingImproved rec.Enhanced rec.DevelopingAwait.dev.apprvlAppraisingDiscoveryMacquarie Research Malaysia O&G 16 August 2019 5 Brownfield opportunity We anticipate Petronas will have tight deadlines to put in place programmes to maximise recovery from aging assets.Among the domestic players with the balance sheet capacity,track record and expertise,Dialog stands out as our top pick to benefit directly from new brownfield and/or greenfield assets;putting offshore services aside.Based on IHS data,we have identified 14 blocks that have 20%of their reserves remaining.For greenfield opportunities,see pg 12.Fig 12 Producing blocks 10%)Fig 13 Producing blocks RM4bn by FY22,with topside facilities making up RM1.7bn of said capex.In fact,we anticipate further upside from brownfield redevelopment projects lifting demand of offshore services and solutionspositive for both Dialog and Sapura.The ongoing requirement for capex also affirms our Petronas Monetisation Thesis.See also:Petronas 2019-21 outlook Fig 32 Malaysian offshore capex:non-exploration capex on growth trajectory Source:IHS Markit,Macquarie Research,August 2019 Fig 33 Malaysian offshore operating cost:flat trajectory Source:IHS Markit,Macquarie Research,August 2019 012345678201020112012201320142015201620172018201920202021202220232024202520262027202820292030US$bnFacilities SubseaFacilities FloatersFacilities PipelinesFacilities StructuresFacilities TopsidesDecomm TotalSeismic CostsDev DrillingDev Facilities Prod.FacilitiesAppraisal Drilling CostsExploration Drilling Costs01234567201020112012201320142015201620172018201920202021202220232024202520262027202820292030US$bnProducingImproved recoveryEnhanced recoveryDevelopingAwaiting dev.approvalAppraisingDiscoveryMacquarie Research Malaysia O&G 16 August 2019 12 Greenfield opportunities at home We expect Sapura-OMV to be a top contender for new greenfield projects.There are currently three major assets that have been appraised and are awaiting approval Limbayong,Belud,and K5.We expect development of these assets to go ahead as planned.Fig 34 Assets awaiting approval Source:IHS Markit,August 2019 There are a large number of assets that are currently under appraisal with a more balanced resource skewabout 50:50 liquid to gas.The largest block is SK318,with estimated 530MMBoe of reserves estimated.Fig 35 Under appraisal by blocks Source:IHS Markit,August 2019 0102030405060201920202021202220232024202520262027202820292030203120322033203420352036203720382039204020412042204320442045204620472048204920502051205220532054MMboeLimbayongUL-Belud DevelopmentK50501001502018201920202021202220232024202520262027202820292030203120322033203420352036203720382039204020412042204320442045204620472048MMboeSK-306SK-315Mengkuang/Tembakau GHABlock 2GSK-314ABlock NSK-305BinduBlock RWL4-00PM-313SK-410BSK-318SK318Not knownSK410BPM313Macquarie Research Malaysia O&G 16 August 2019 13 Looking further ahead,we note that Petronas has been active in offering new blocks for exploration.In 2019 Petronas put up 14,116km2 of blocks up for bidding(which closed May/June).Meanwhile Petronas put up 39,540km2 of blocks in 2018,of which 24%(by area)or 2/9 blocks was taken up(Figs 39-42).Fig 36 Petronas 2019 bidding blocks Block name Basin name Bid close Terrain(s)Block(km2)%Deepwater PM-337 Malay Basin 30-May Shelf 2,464.17 n/a PM-409 Malay Basin 30-May Shelf 1,667.32 n/a SB 2H Outboard Belt(Northwest Sabah Province)27-Jun Deep Water/Shelf 2,157.87 69%SB 2T Baram Delta|Outboard Belt (Northwest Sabah Province)27-Jun Deep Water/Shelf 2,723.52 99%SB-407 Inboard Belt(Northwest Sabah Province)/Northwest Borneo Terrane 30-May Shelf 4,058.02 n/a SB-411 Baram Delta|Inboard Belt(Northwest Sabah Province)/Outboard Belt(Northwest Sabah Province)30-May Shelf 1,046 n/a Source:IHS Markit,Macquarie Research,July 2019 Fig 37 Bid blocks Peninsula Malaysia Fig 38 Bid blocks Sabah Source:IHS Markit,Macquarie Research,July 2019 Source:IHS Markit,Macquarie Research,July 2019 Macquarie Research Malaysia O&G 16 August 2019 14 Fig 39 Petronas 2018 bidding blocks contracted Block name Basin name(s)Contract status Terrain(s)Block(km2)Award date Contract type Petronas stake Partner Partner stake PM-415 Malay Basin Surface Exploration Shelf 3,350 2019-03-21 PSC 30%PTTEP HK Offshore Ltd 70%PM-407 Malay Basin|Penyu Sub-basin(West Natuna Basin)|Tenggol Arch(Malay Basin)Surface Exploration Shelf 6,278 2019-03-21 PSC 45%PTTEP HK Offshore Ltd 55%Source:IHS Markit,Macquarie Research,August 2019 Fig 40 Petronas 2018 bidding blocks open bl