Petra Energy’s impressive run buoyed by positive outlook of the O&G sector

Petra Energy Bhd’s uptrend is expected to continue given the bullish technical indicators backed by positive news flow.

The counter surged to a high of RM1.67 on June 13 but succumbed to investors’ profit taking activities the next day to close at RM1.56.

It was trading at a low of 67 sen a year ago. In the past year alone, Petra Energy has jumped 92.6%.

Despite the recent highs, the counter appears to have room to reach resistance levels of RM1.90 and RM2 with our stop loss price seen at RM1.40.

Investors are likely buoyed by the successful bagging of a job from national oil giant, Petronas.

On June 12, Petra secured a letter of award (LOA) from Petronas in relation to the Banang Late Life Asset Production Sharing Contract (PSC) for a 10-year period until June 2034.

There was no fixed value stated in the letter of award.

Petra said it is in a good position to undertake this PSC via its subsidiary, which is progressing into an upstream PSC operator.

It is also the operator of Block SK433, onshore Miri, Sarawak, with Petroleum Sarawak (Petros), which the company was awarded in July 2021.

Petra Energy also saw its net profit skyrocketed 303% a year-on-year to RM52.7 million in FY Dec 2023,

It subsequently made net a loss of RM2.4 million in 1QFY24, which is substantially lower than its net loss of RM5.9 million a year ago.

Based on its book value per share of RM1.22 as of end-Mar 2024, the stock is presently

trading at a price to book value multiple of 1.4x.

The company believes that he oil & gas industry remains positive evidenced by the favourable oil price level.

Major oil producers continue to increase their capex in response to prolonged lack of investment in the past.

In January, oil and gas (O&G) counters saw active investors’ buying interest which may have been spurred by several O&G agencies reporting that oil demand is set to intensify as soon as 2030.

Meanwhile, AmInvestment Bank Bhd said despite diverging views taken by agencies such as the US Energy Information Administration, the International Energy Agency and the Organisation of Petroleum Exporting Countries regarding the near-term outlook on the O&G landscape, it did not expect a significant decline in upstream capex in 2024.

Citing estimates by Rystad Energy, research house stated that global upstream investments in 2023 is estimated to have closed at US$580 billion (RM2.74 trillion), which was 80% of the peak in 2014.

The good run in Petra Energy’s share price may be spurred by the positive outlook in the O&G sector and better financials. It appears that the counter will still have room for further upside.