• Singapore’s 5 most traded stocks representing the energy sector include Rex International, AusGroup, Interra Resource, China Aviation Oil and Mermaid Maritime decline in-line with Crude Oil prices in September, averaging 10.4% declines for the month.

• Of the 5, Interra Resources and China Aviation Oil had relatively resilient performances despite the COVID-19 impact – Interra narrowed its 1H 2020 net loss to US$0.82 million from a net loss of US$1.54 million in 1H 2019, while China Aviation Oil remained in the black, reporting 1H 2020 net profit of US$23.57 million, down 57.0% y-o-y.

Rex International (SGX:5WH)

• The Catalist-listed Rex International said on 9 September 2020 it has signed options agreements to partially fund its 90%-owned subsidiary Lime Petroleum's participation in the exploration drilling of two wells in Norway.
  • Under the agreements, Switzerland-based oil and gas exploration company Trace Atlantic Oil has options to receive shares of proceeds of potential dividends from Lime.
  • These dividends will be due to Rex's wholly owned subsidiary Rex International Investment, which holds the 90% stake in Lime, if the drilling activities of the Apollonia prospect in licences PL263D/E and the Fat Canyon prospect in licences PL937/B are successful.
• Rex said on 1 September 2020 that its 90%-owned unit Lime Petroleum has been absolved of compensation claims made against it in Norway.
  • The Oslo District Court on Tuesday fully acquitted the defendants, Lime Petroleum and two of its directors and a former officer.
• Rex said it recorded revenue of US$14.57 million in 1H FY2020, compared to nil revenue generated by the Group in 1H FY2019, mainly due to oil sales in Oman in April, May and June 2020.
• The Group recorded total loss after tax of US$23.03 million in 1H FY2020, as compared to total profit after tax of US$25.23 million in 1H FY2019, due to high start-up costs, low realised oil prices and the depletion of oil and gas properties.
• The Yumna 1 production facilities are now permanent, with operating costs of about US$80,000 per day, and sale of the Masirah crude started in April 2020 in the second quarter.
• The Group is going into the rest of 2020 with improved contributing factors, with Brent oil price at a more stable a range of about US$45 per barrel.
• It remains in a good financial position and will now book recurrent income from production in the Yumna field in Oman.
  • This will enable it to develop Block 50 according to the Field Development Plan approved by the Ministry of Oil and Gas in Oman.
  • Within January 2021, the Yumna 2 well will be drilled and during 2021, there will be an exploration well from one of its already identified prospects.

Click here for full results release.

AusGroup (SGX:5GJ)

• AusGroup's revenue for FY2020 decreased by 8.2% to A$262.8 million, while net loss after tax from continuing operations for FY2020 was A$13.6 million, reflecting reduced operating activity due to unprecedented effects of COVID-19.
• 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.
• Significant investment in the Resources sector (Iron Ore, Nickel, Gold) is continuing and the Group is well-placed to provide the sector with fabrication services, modularised solutions, SMP, construction, commissioning and integrated asset maintenance services.
• Increasing levels of domestic and international competition have led to continued margin pressure, creating a need to implement significant cost reduction initiatives whilst focusing on improving productivity, quality and delivery enhancements
• Increased demand for skilled labour is putting upward pressure on wage rates.
• Focus on core strengths, capabilities and efficiency improvements will underpin the profit generation from the Group’s service offering.
• The recent downward volatility in world fuel prices as a result of COVID-19 is likely to delay capital investment expansion in the LNG sector.
• Following the completion of the rights issue and share placement of S$46.4 million in FY2019, additional debt to equity conversions and the extension to the maturity of the Notes by four years and the Shareholder loan by five years to 3 December 2022 and 31 October 2023 respectively, these major debt repayments are no longer due payable within one year.
  • At 30 June 2020 the only debt due to be repaid in FY2020 is A$7.2 million.
  • Accordingly, the short-term focus on the Group’s cashflow to meet short term debts has been substantially addressed as the Group has rescheduled 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 the Group continues to discuss additional financing facilities with its principal banker.
  • The Group is focused on options to reduce debt further prior to the new maturity dates in 2022 and 2023 and bolster working capital to support the expansion of services to its clients.
• Whilst COVID-19 has led to delays 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.

Click here for full results release.

Interra Resources (SGX:5GI)

• Interra Resources's 1H 2020 revenue was US$5.43 million, down 28% y-o-y due to lower weighted average transacted oil prices of US$40.83 per barrel for 1H 2020, despite higher sales of shareable oil of 168,364 barrels.
• 1H 2020 net loss was US$0.82 million, as compared to net loss of US$1.54 million in 1H 2019.
• Cash and cash equivalents were US$5.08 million as at 30 June 2020.
• Myanmar’s shareable production increased by 9% to 168,364 barrels in 1H 2020 from 154,673 barrels in 2H 2019, largely due to early drilling successes of three new wells in Myanmar together with combined gains from water flood projects and other operations with respect to existing wells.
• Due to plunging oil prices in early 2020, all new well drilling has been suspended.
• Monitoring and optimising in both fields of the nine current water flood projects continue to show positive incremental oil production gains, which offset the loss of contribution from new well drilling.
• For Kuala Pambuang PSC, the 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.
  • Although production testing was planned to be performed in early 2020, the low oil price and uncertainties in the world economy have forced suspension of work until the situation becomes more certain.
  • Nevertheless, 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.
• The Company has suspended all major capital expenditure for the rest of the year as a result of uncertain economic conditions.
• Further to the completion of the placement and issuance of new ordinary shares on 9 June 2020, the Company has strengthened its cash position in the midst of the ongoing crisis.
• Barring any unforeseen circumstances, the Company has sufficient cash resources to fulfill the current year’s work program.

Click here for full results release.

China Aviation Oil (SGX:G92)

• China Aviation Oil’s 1H 2020 net profit of US$23.57 million was 57.0% lower y-o-y, due mainly to a decrease in gross profit from trading activities and lower share of results from associates.
• Gross profit declined 20.30% to US$22.87 million due mainly to lower gains from trading activities and its jet fuel supply business, which were impacted by COVID-19.
• Despite the increased global economic and demand uncertainties which has inevitably impacted the businesses of China Aviation Oil and its associates significantly, the Group’s businesses have remained stable for the first half of the year to deliver a set of creditable results.
• The Group’s performance has been helped by its measures to proactively seize market opportunities, continuously evolve its business models and curtail expenses.

 Click here for full results release.

Mermaid Maritime (SGX:DU4)

• Mermaid Maritime said on 28 September it will sell its 33.76% stake in Asia Offshore Drilling for US$31 million in cash.
  • Mermaid's wholly owned subsidiary, Mermaid International Ventures, exercised a put option to sell all its shares in AOD to Oslo-listed deepwater drilling contractor Seadrill.
• On 18 September, Mermaid Maritime said it will enter into a joint venture with Meitech Offshore Engineering (MOE) to boost their capabilities in offshore transport, installation and decommissioning in Thailand.
• On 17 September, Mermaid announced the setting up of another joint venture company with PTT Exploration and Production to develop robotics and artificial intelligence technology for use in commercial subsea engineering services.
• On 13 August 2020, Mermaid reported a net loss for the three months ended 30 June 2020 of US$9.3 million, an increase of US$3.7 million y-o-y.
• EIA expects Brent crude oil prices to average US$41/barrel during 2H 2020 and US$50/barrel during 2021, reaching US$53/barrel by the end of 2021. However, this price path reflects global oil consumption of 96 million bpd during 2H 2020 along with relatively strict compliance to announced OPEC+ production cuts, both of which are uncertain.
• Rystad Energy’s latest estimates project that global oil demand will fall by 11.8% or 11.7 million bpd y-o-y as a result of COVID-19. It projects that global upstream investments are set for a 15-year low, falling to US$383 billion in 2020, a 29% decrease y-o-y.
• About 125 E&Ps have thus far communicated spending cuts, amounting to a reduction of US$100 billion in 2020, with National Oil Companies the largest contributors to the global reduction, decreasing spending by US$32 billion, and most shale operators also revising their capital guidance range.
• For 2020, the subsea sector might have a revenue cushion from already sanctioned projects currently under development, but it is expected that any new investments sanctioned this year will be even lower than the bottom of the last down cycle in 2016.
• Major offshore projects are being pushed out by operators, and for any projects that are still on the table, service companies will struggle to secure financing in the current market.
• Its biggest client Saudi Aramco is currently weighing bids for new long-term offshore maintenance contracts involving its huge Marjan oil field, which could be valued at US$1.5 billion to US$2 billion annually. However, the Kingdom has deferred plans to FID the US$5-billion Zuluf field until at least 4Q 2021.
• Global utilisation for offshore rigs dropped over 7% - the largest percentage change in utilisation that the rig market has seen in this period.
  • Drilling rig contract cancellations continue as COVID-19 depresses oil demand and lowers the energy price environment.

 Click here for full results release.