KUALA LUMPUR (Nov 5): SapuraKencana Petroleum Bhd shares fell as much as five sen or 2% after crude oil prices dropped substantially overnight.
Lower oil prices overshadowed news yesterday (Nov 4) on SapuraKencana getting Petroliam Nasional Bhd's (Petronas) nod for a gas field development project.
Today, SapuraKencana shares fell to their lowest so far at RM2.21. At 10.27am, the stock was traded at RM2.22, for a market capitalisation of RM13.3 billion.
A total of 448,600 shares exchanged hands.
Yesterday, SapuraKencana said it secured the East Malaysia marine gas field development plan approval from Petronas.
The gas field is known as B15 within the SK310 production sharing contract area.
Today, Reuters reported that crude oil futures fell 4% on Wednesday, wiping out gains from the previous day's rally, as a strong dollar, tumbling gasoline prices and rising U.S. crude inventories bore down on the market.
Brent crude futures settled down US$1.96 or 3.9% at US$48.58 a barrel. US crude closed down US$1.58 or 3.3% at US$46.32.
In Malaysia, analysts said the low oil price backdrop was expected to persist.
"We opine that low oil price is likely to persist in mid term, amid concerns about oversupply from US shale, lifting of Iran sanction and weakening demand from China," Hong Leong Investment Bank analyst, Jason Tan Yat Teng, wrote in a note today.
Tan said Hong Leong retained its "hold" call on SapuraKencana shares, with an unchanged target price of RM2.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)