T7GLOBAL: Energy Services Firm Bolsters Order Book with New Well Abandonment Contract
| Key Information | Details |
|---|---|
| Investment Bank | TA SECURITIES |
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent research report highlights a significant development for a prominent energy services provider, which has secured a new work order from Petronas Carigali Sdn Bhd (PCSB) for the Zuhal East well abandonment project. The award is estimated to contribute RM64 million in revenue and RM6 million in net profit for the firm.
New Order Details
The newly awarded contract covers integrated well plug and abandonment (P&A) services, with the work period slated to commence from November 17, 2025, and conclude on March 31, 2026. This project is a component of PCSB’s broader 53-well program under the 3-year sub-package B3 of the Pan-Malaysia panel contractor (PAC) integrated workover contract.
The investment bank’s analysis suggests the RM64 million order value is based on the assumption of 7 wells at an average cost of RM9 million per well, coupled with a 9% net profit margin. This project is expected to utilize the TSeven Enya jack-up rig, with an estimated full-year utilization rate of 98% in 2026.
Operational Outlook and Risks
Management indicates that 18 wells are scheduled for completion in 2025 and an additional 18 wells are anticipated for 2026. The PETRONAS Activity Outlook 2025-27E (PAO) forecasts approximately 153 wells for decommissioning, averaging about 51 wells annually, which underpins the company’s potential to secure further orders in 2026 and 2027. The firm awaits the release of PAO 2026-2028 for enhanced medium-term visibility.
Despite the new contract, the investment bank’s earnings forecasts remain unchanged as this development had already been factored into revenue assumptions. The firm maintains a healthy order book of approximately RM4 billion, with 90% derived from the energy segment and 10% from the industrial services (IS) segment, ensuring long-term earnings visibility. Key risks include potential variations in work orders (higher or lower than expected), unforeseen delays in the BHS project, and fluctuations in operating costs.
Analyst Rating
The investment bank maintains its HOLD rating on the stock, with an unchanged SOP-derived target price of RM0.32. This target price implies a 5x 2026E PER. The assessment continues to view the company as a beneficiary of robust domestic and offshore activities.
