4 of Singapore’s 5 most traded energy stocks have outperformed global peers over the past 12-month of swinging oil prices, beating the median 21% decline observed the global Sector and the 26% decline in the price WTI Crude Oil and 31% decline in Brent Crude Oil.
The 5 Singapore stocks - Rex International, Interra Resources, Mermaid Maritime PCL, AusGroup and China Aviation Oil generated a median decline of 1% over the 12-month. Both Exploration & Production stocks, Rex International and Interra Resources, generated respective gains of 178% and 70%.
Catalist-listed Rex International has been the 40th-most traded stock in Singapore this year. On 17 July, the Exploration & Production business noted the Ministry of Oil and Gas in Oman had approved the Field Development Plan for the Yumna Field and that the Group will participate in a well to be drilled in Norway in late August.
4 of Singapore’s 5 most traded Energy stocks have outperformed global peers over the past 12 months, with all 5 stocks beating the median 21.5% decline for global Energy stocks.
Both Catalist-listed Rex International and Mainboard-listed Interra Resources have bucked the median decline, both posting respective gains of 177.9% and 69.7%. Mermaid Maritime PCL has declined 1.4%, whilst AusGroup and China Aviation Oil have declined 10.7% and 22.4% respectively.
Demand-driven declines in energy markets have seen the price of WTI Crude Oil futures decline from US$55.88/bbl to US$41.29/bbl over the past 12 months, with Brent Crude Oil declining from to US$63.18/bbl on 24 July 2019 to US$43.34/bbl on 24 July.
With earnings season approaching, the following results and outlooks were posted when the 5 companies last reported:
Rex International (SGX:5WH)
- For the year ended 31 Dec 2019, Rex International's service revenue fell 67% YoY to US$135,000, while net profit surged 11-fold to US$22.2 million - See FY2019 results.
- The Group recorded lower total exploration and evaluation (E&E) expenditure of US$1.68 million in 2019 vs US$2.09 million in 2018 due to decreased exploration consulting fees and expensed exploration activities in Norway for the year.
- In Norway, the Group’s subsidiary LPA was awarded stakes in two new Norwegian Sea licences in Predefined Areas round Norway (APA 2019), adding to its portfolio of exploration drilling projects.
- LPA has the opportunity to review the option to participate in progressing the Shrek discovery made in 2019 further towards production, or repeat its proven business model to sell its stake and recycle capital.
- In Oman, the drilling of the Yumna 1 in Block 50 Oman has been completed.
- Early Development Phase has started after successful flow test of 11,843 stock tank barrels of oil per day through a 1-inch choke, with a crude oil gravity of 42 degrees API5.
- Success in the extended early production test of the well, and subsequent obtainment of declaration of commerciality will boost the Group’s revenue stream and open options to drill more wells in the vicinity of Yumna 1.
- On 17 July, Rex International announced the Ministry of Oil and Gas in Oman had approved the Field Development Plan for the Yumna Field and awarded Declaration of Commerciality. The company added that production from the field is ongoing. The Group also announced it will participate in a well to be drilled in Norway in late August 2020 in the Appolonia prospect in licence PL263 D/E.
- For the third quarter ended 31 March 2020, AusGroup chalked up revenue of A$66.1 million, almost flat from the year-ago quarter, but lower than expeced following postponement of client-determined, non-critical projects due to COVID-19 - See 3Q results.
- Net loss after tax from operations for 3Q was A$3.2 million vs net profit of A$0.6 million in the year-ago period.
- The Group’s ability to meet its short term debt obligations has been substantially enhanced after rescheduling the majority of its borrowings to longer term (non-current) tenure during FY2019.
- In 2Q FY2020, the Group secured a Revolving Credit Facility to access additional working capital to fund the Group’s requirements, and it continues to discuss additional financing facilities with its principal banker.
- The first signs of COVID-19 have already been seen in 3Q FY2020, with effects expected to continue through the rest of the year, as the full impact of postponements in work programmes on customer-determined, non-critical work is realised
- The Group continues to focus on cash preservation
- The federal government’s stimulus package for the JobKeeper wage subsidies will enable the Group to retain key resources, preserving cash until the postponed “non-critical” work programmes are re-started and work flow returns to normal
- Major new LNG construction projects are now completed and these have moved into the production phase, where maintenance services will be required to maintain safe and reliable operations for the next 40+ years, providing long-term and sustainable demand for the Group’s service offering
- Increasing levels of domestic and international competition have led to continued margin pressure, creating an associated need to implement significant cost reduction initiatives, whilst focusing on improving productivity, quality and delivery enhancements
- The recent downward volatility in crude prices due to COVID-19 is likely to delay capital investment expansion in the LNG sector
- Whilst COVID-19 has led to delay in awards of new contracts, the forward pipeline is increasing, with core projects expected to grow in scale and complexity to provide opportunities for organic growth in the energy and process sectors
Interra Resource (SGX:5GI)
- Interra Resource's revenue from continuing operations for the financial year was US$15.68 million, 5% higher YoY, due mainly to higher sales of shareable oil of 314,467 barrels, although at lower weighted average transacted oil prices of US$63.13 per barrel vs previous year’s US$67.95 per barrel - See FY2019 results.
- Total net loss for the financial year was US$0.58 million, as compared to net profit of US$0.73 million in the previous year.
- Despite the good performance of its Myanmar operations for the quarter, the overall year to-date result was affected by the impairment charges made in 2Q 2019 against investments in an associated company.
- Depending on the result of the exploration well drilled in Kuala Pambuang PSC, the Group will assess and evaluate the appropriate fund raising options.
- Barring any unforeseen circumstances, the Company has sufficient cash resources to fulfil the current year work program.
- Myanmar - Chauk and Yenangyaung IPRCs (Interra 60%):
- Its shareable production increased by 3% to 78,393 barrels in 4Q 2019 from 76,280 barrels in 3Q 2019.
- For the full year, shareable production increased to 314,467 barrels in FY 2019, up 18% YoY, thanks to drilling successes earlier in the year, combined with gains seen from the reactivations of shut-in wells and new perforations of prospective reservoirs.
- Indonesia - Kuala Pambuang PSC (Interra 67.5%):
- Exploration well KP-1 was completed on 11 Dec 2019 after reaching a total depth of 3,771 feet
- The drilling and testing results were positive, and casing was successfully installed and cemented on 15 Dec 2019
- Production testing is planned for mid-year 2020
- Further analysis of all technical data is ongoing, and will be incorporated into well completion plans as well as the overall sub-surface interpretation of the Exploration Block.
- The company will announce any noteworthy results of data analysis and expected perforation testing.
- No significant contribution is expected from this field in the near term.
Mermaid Maritime (SGX:DU4)
- Mermaid Maritime recorded service income for the three months period ended 31 March 2020 of US$22.2 million, down 14.0% YoY, while net loss widened to US$10.3 million from US$4.2 million in the previous period - See 1Q results.
- The collapse in oil demand and resulting oversupply in the global market have led oil and gas companies to cut capex, with significant capital reductions seen in upstream operations, particularly for global exploration budgets and unsanctioned developments.
- Whilst the Group continues to focus on securing its vessels utilisation rates throughout 2020, it has already taken painful but necessary measures to lessen the impact of COVID-19 on its business:
- Minimising hire of third-party vessel charters,
- Further reducing workforce,
- Cutting business spending while remaining competitive and operationally efficient.
- Offshore drilling joint venture with Seadrill Ltd under Asia Offshore Drilling Ltd (AOD):
- The Group’s three high specification jack-up drilling rigs continue to operate optimally in the Middle East with near full utilisation in 1Q 2020.
- Due to recent crude oil price moves, the offshore drilling sector has seen price cuts, project delays, suspensions, cancellations and early termination of contracts.
- In this present climate, the jack-up market remains challenging and competition fierce.
- The current services contract for ‘AOD I’ expires in June 2022, ‘AOD III’ expires in Dec 2022 and ‘AOD II’ expires in April 2023.
- There can be no assurance that these existing AOD contracts will continue until expiry of their terms and/or that the prevailing day rates secured for them will not be reduced.
- During this time, AOD is focused on using commercial best efforts to retain gainful employment for all three rigs with its existing customer into the long term, and to maintain the operations of all rigs at optimal levels.
China Aviation Oil (SGX:G92)
- China Aviation Oil's net profit for the full year ended 31 December 2019 rose 6.4% YoY to a record US$99.83 million, driven by healthy performance of the jet fuel supply business and trading optimisation activities - See FY2019 results.
- 2019 revenue decreased 1.3% to US$20.34 billion, due to lower oil prices, with jet fuel prices averaging US$77.30 per barrel in FY2019 compared to US$85.04 per barrel in FY2018.
- Total supply and trading volume for 2019 increased 6.0% to 36.9 million tonnes, fuelled by strong growth in trading activities and higher demand for imported jet fuel from China.
- China Aviation Oil remains focused on improving operational efficiencies to deliver sustainable and profitable growth,
- With the Group’s established foothold in the jet fuel supply and trading business in the Asia Pacific region, it will continue to leverage on its core competencies to expand its presence on the global platform,
- For other oil products, it will continue to build up structural advantages globally, complemented by opportunities to acquire or invest in synergistic businesses or assets.