RH Petrogas

RH Petrogas: announced that it has begun drilling the Klagalo-1 well to test the huge Klagalo prospect in the Basin PSC. Through the Klagalo-1 well, RHP is targeting to add 38mmboe to its 2C contingent resources, and at US$8.04/bbl valuation, if successful, OSK-DMG believes this could add US$305m to RHP’s value. The house believes the 12% retracement in share price over the last two trading sessions is far overdone, likely dragged by non-fundamental reasons, ie. the Blumont-Asiasons-Liongold saga that resulted in losses for a broad spectrum of market players. OSK-DMG sees RHP as the most attractively valued E&P co in Singapore. The house estimates RHP’s oilfield assets are worth $0.98/share today. Taking into account the upside potential from successful explorations, the house sets a TP of $1.33, set to parity with its NPV-and-risking model, and reiterates its Buy call.