KUALA LUMPUR: Macquarie Research sees national oil firm Petroliam Nasional Bhd’s (Petronas) capital expenditure (capex) contracting by 20% to RM44 billion in 2015 from RM55 billion last year.

In a report on Monday, the research house said given the recent directive by the Ministry of Finance to all government-linked companies, statutory bodies and its subsidiaries to stop buying foreign assets, it believes that Petronas would refocus on domestic fields and assets, which favours Malaysian oilfield services companies.

Hence, even with a reduced capex, but a refocus on Malaysia, the decrease in the amount of contracts awarded even after considering the fall in oil price, may be less than expected, it said.

Within Macquarie Research’s Malaysia oil coverage, only SapuraKencana Petroleum Bhd is involved in upstream production, after the acquisition of Newfield Exploration Co’s oil and gas (O&G) fields in Malaysia, in addition to other oilfield services, while the other companies are involved in oilfield services.

“All O&G stocks [were] sold down sharply when Petronas stated it would reduce its capex for 2015 by 15% to 20% over 2014 in light of the falling crude oil price.

“The negative sentiment is largely focused on future contract wins while investors ignored the existing locked in order book for 2015 and 2016 that most O&G stocks in Malaysia, which are oilfield services companies, have,” it said.

Among its stock picks, Macquarie Research has an “outperform” rating on Dayang Enterprise Holdings Bhd at RM2.91 with a target price of RM4.25, saying the maintenance of existing production assets is critical.

It also has an “outperform” rating on SapuraKencana at RM3.25 with a target price of RM4.80, noting the company’s RM26.8 billion order book, including RM12.6 billion in Brazil in a long-term pipe lay support vessel charter.

This article first appeared in The Edge Financial Daily, on January 14, 2015.