Interra Resources

Interra Resources: Daiwa has an unrated report on sector. House recently visited Interra Resources for an insight to its oil and gas business. The co has five upstream assets, of which four produce oil: two in Indonesia, and two in Myanmar. Interra appeared very happy with its recent US$78.5m acquisition, as the Benakat oil field lies adjacent to its own Tanjung Miring Timur (TMT) field and produces from the same geologic structures and formations as its own TMT field. Thus, the acquisition represents a good strategic fit for its asset portfolio, in the company’s view. Interra stated that post the Benakat acquisition, it remains open to other acquisitions. The co stated that given the headwinds faced by the Indonesian economy, opportunistic M&A targets could surface. Regarding Myanmar, it said that in the recent round of tenders, there were too many companies competing for acreage and thus the country is a low priority on the M&A front at present. The stock is currently trading at a 2013E P/E of 29.1x based on Bloomberg consensus EPS forecast. Based on the company’s 2P reserves of 23.3mmboe as at end-2012, Interra currently trades at an EV/boe of US$7.07/boe, compared to its Asia- Pacific upstream peers’ average of US$19.20/boe.