RH Petrogas

RH Petrogas (RHP): OSK DMG maintains Buy rating with $1.38 TP. The final test stage of the Zircon-1 well showed that oil failed to flow, likely due to complications in offshore drilling. This led to RHP plugging and abandoning the well. As the exploration costs are recoverable under the PSC, DMG understand that no writeoff is imminent. House gather that three oil zones are being tested in the Klagalo-1 well, which led to the house raising its risking for this prospect to 20% from 10%. RHP is looking to acquire brownfield assets with current production, and that the target field is in the Asean region. This should allay investors’ concerns of the multi-year lead time to production from RHP’s existing exploration assets.