KUALA LUMPUR (April 12): Sapura Energy Bhd shares jumped 9.3% in active trade this morning after its wholly-owned subsidiary Sapura Exploration and Production (Sarawak) Inc (Sapura E&P), Petronas Carigali Sdn Bhd and Sarawak Shell Bhd have taken the final investment decision (FID) to develop Sarawak's Gorek, Larak and Bakong gas fields under phase one of the SK408 production sharing contract (PSC).

At 9.13am, Sapura Energy rose 6 sen to 70.5 sen with 80.01 million shares done.

The FID follows Petronas' approval for the field development plan. It also follows the signing of the key terms to the gas sales agreement for phase one of the SK408 gas field development.

Sapura E&P is the development and production operator of the Larak and Bakong fields while Sarawak Shell is the development and production operator of the Gorek field.

Meanwhile, Hong Leong IB Research maintained its “hold” rating on Sapura Energy at 64.5 sen with a higher target price of 64 sen (from 48 sen) after Sapura Energy announced that it has taken FID together with its partners to develop the Gorek, Larak and Bakong fields as phase 1 in the SK408 PSC.

In a note today, the research house said first gas delivery is targeted for 1QCY20 and capex is about US$200 million over the next three years.

“Maintain forecast as earnings contribution is expected to kick in earliest by FY21 which is beyond our forecast horizon.

“Based on our estimation, EBITDA contribution from this project in the first year is in the range of RM350 million-RM400 million.

“Maintain Hold with higher target price of 64 sen (from 48 sen) as the finalisation of gas sales agreement for phase 1 of SK408 improves the longer term earnings prospect of the company,” it said.