RH Petrogas amasses 4.1% more barrels in 2Q

Credits to the Basin production sharing contract.

RH Petrogas remains a key player in the oil and gas sector as it continues to see profit growth in 2014.

In a report by RHB, it was shown that RH Petrogas’ 2Q14 results were healthy with c.4,300boepd (barrels of oil equivalent per day) of production, 4.1% higher than FY13’s average of 4,130boepd.

EBITDAX (EBITDA excluding exploration expenses) was USD8.2m in2Q14, up 6% y-o-y, in line with the increase in production.

RHB adds that there is no progress on the Fuyu-1 project as takeover talks are still ongoing. The Fuyu-1 approval appears to have been delayed by the ongoing corruption trials in China, and RHB sees the final stamp coming after the dust settles.

RH Petrogas trades at an EV/(2P+2C) of USD5.39/boe. Of its 81.6mmboe (million barrels of oil equivalent) in reserves and resources, 71% are in oil. This compares favourably against peers like KrisEnergy (KRIS SP, NR) whose ratio is 17%.

Here’s more from RHB:

As RH Petrogas’ share price has retraced 21% from its recent high and now offers 61% upside, RHB adds the stock (again) to our top alpha list. Our TP values the company at an EV/(2P+2C) of USD8.74/boe. Potential catalysts include: i) M&As of brownfield assets, ii) the upgrade of 2C resources to 2P reserves, and iii) the approval of Fuyu-1. Key risks include unsuccessful exploration expenses and unexpected maintenance requirements.