Co has announced that its land rigs have successfully secured new contracts. KS Discoverer 1 has received a 1-yr renewal contract (transferred to Gulf Keystone Petroleum Int'l Ltd, on the same terms that were prev announced). The value of this extension is worth about US$12m. On the other hand, KS Discoverer 4 has been awarded a contract from Storm Energy for a single well drilling programme. We understand the US$3m contract is for a period of approx 3mths.
However, we contend that KS’s 2Q10 results may come in below mkt expectations as a number of its assets are currently in between charters and in advanced negotiation for new charters. Moreover, the group will also recognize the acquisition costs incurred on the consolidation of its Distribution business in 2Q. Based on Bloomberg estimates, the stock now trades at 12.5x FY10 and 9.5x FY11 PER.
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