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Conoco & Allies to Develop Malikai - Analyst Blog

By: Zacks.com
Posted: 2/6/2013 3:20:00 PM
Referenced Stocks: COP;CVX;LNG;TLP;XOM

ConocoPhillips Sabah Ltd, a unit of U.S. energy behemoth ConocoPhillips ( COP ), along with its partners Royal Dutch Shell plc 's ( RDS.A ) affiliate Shell Malaysia and Petronas Carigali, have taken a final investment decision for the development of Malikai, a deepwater oil filed offshore the State of Sabah in Malaysia.

Malikai − located in waters up to 500 meters (1,640 feet) deep − remains operated by Sabah Shell Petroleum Company. It is also considered the third deepwater project after Kikeh and Gumusut-Kakap.

The field was awarded by Petroliam Nasional Bhd, or Petronas − Malaysia's state oil and gas company − back in 1995. ConocoPhillips and Shell hold 35% interest each in the expansion, while Petronas Carigali holds the remaining 30% share.

The companies in the joint venture expect the project to commence between 2016 and 2017. This expansion involves 17 wells that are to be drilled with a 23,500 ton Tension Leg Platform (TLP) production facility, which will be the first TLP to be made and installed in the country. The companies have already awarded contracts for the engineering, procurement, and construction of the TLP.

ConocoPhillips is poised to benefit from a pipeline project in Malaysia, the liquefied natural gas (LNG) project in Australia, the UK, Norway, and the Canadian oil sands, and the US Lower 48 liquids-rich plays. These activities are expected to fuel its long-term production growth target.

However, the company registered a marginal growth in its average daily production during the fourth quarter of 2012, while its full-year 2012 production level dropped 2.5% on an annualized basis.

With leading positions in both natural gas and heavy crude oil in North America, as well as a legacy position in the North Sea and growing exposure to lucrative international regions, ConocoPhillips expects to replace reserves and sustain production growth over the long term.

We have a Zacks Rank #3 Rank (Hold) for ConocoPhillips - the third biggest U.S. integrated oil company after ExxonMobil Corporation ( XOM ) and Chevron Corporation ( CVX ).



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