Krungsri Securities (KSS) has a positive view on the disposition of BCP selling its entire 15% stake in Yme Petroleum Field to Lime Petroleum AS (one of Norwegian petroleum exploration and production companies) through its subsidiary OKEA at a total value of $15.65 million with the deal expecting to close before the end of this year.
The analyst noted that there is a silver lining to OKEA’s sale of Yme, since the selling did not affect OKEA’s overall profit margin, and Yme profit margin is predicted to be similar to other fields under OKEA’s ownership that will have support from extra profit (non-cash) worth THB 215-358 million in 4Q24 or around 3-5% of 2024 overall profit.
OKEA still has cash and additional resources to invest in more E&P business in Norway during the first half of 2025 to fill the gap left by Yme and align with the company strategy of increasing sales volume to 50,000 barrels for the EU region within 2025.
KSS recommended “BUY” BCP with a target price of THB 49, as prospects from the latter half of 2024 to 2025 show supporting factors for profit recovery from the last quarter following an increase in refinery margin in third quarter of 2024 by 6% from the last quarter. Moreover, oil demand is expected to increase during the winter in the last quarter of this year.
This transaction followed the announcement from Bangchak Corporation Public Company Limited on Wednesday that OKEA ASA (OKEA – a subsidiary in which the Company holds 45.58% equity interest) has entered into an agreement to sell its 15% working interest in the Yme Petroleum Field to Lime Petroleum AS (Lime) for a consideration of USD 15.65 million, which exceeds its book value. Additionally, all related decommissioning costs of Yme Petroleum Field will be transferred to Lime. The agreement with Lime was entered into on September 23, 2024, and the transaction is expected to be completed by the end of 2024.
The company stated that this divestment is a part of OKEA’s strategy to focus on its operations in core areas, aiming to manage financial and human resources more efficiently. Following the Transaction, OKEA’s production in 2024 will subsequently be reduced by 3.0 – 3.5 thousand barrels of oil equivalent per day (kboepd). Additionally, figures in this section are subject to potential changes in working capital movements, macro developments and performance at Yme in the fourth quarter of 2024.
