RH Petrogas

RH Petrogas (RHP): UOB Kay Hian reiterates Buy, lowers TP to $1.50 (from $1.60), given the slew of newsflow that will be announced over the next few months. On its Koi-2 appraisal well, House value the success at the Koi structure at $0.03/share but if its plan of field development is approved, there could be an additional upside of $0.08/share. UOB Kay Hian believes that RHP’s share price could re-rate significantly if the ODP for Fuyu-1, China is approved. Further, management may be looking to acquire additional production assets this year (one in 1H14 and one in 2H14). The acquisition, coupled with other production wells put in place, would enhance its cash-flow generating capabilities, removing concerns on its cash flow if the Indonesian government does not renew its concessions in Basin and Island PSC (both are expiring in 2020).