Camel Vang mine receives final investment decision: driver of upstream oil and gas stocks
The Golden Camel Oilfield is located in the Kowloon Basin and is expected to produce 200-250,000 barrels of crude oil per day (accounting for 10-12% of Vietnam’s total production). Murphy Oil’s investment is expected to bring a total of $693 million in contracts to Vietnamese upstream oil and gas companies including PVS, PVD (HM:) and PVB. On November 3, oil field operator Murphy Oil made a final investment decision (FID) for the Camel Vang oil field. US oil and gas company Murphy Oil plans to produce the first oil stream from the Camel Vang field in 2026.
Previously, the Golden Camel Oilfield received FDP approval on June 7, 2023, and is expected to bring contracts totaling US$693 million to Vietnamese upstream oil and gas companies. The Golden Camel Oilfield is located in the Kowloon Basin and is expected to produce 2-250,000 barrels of crude oil per day (equivalent to 10-12% of Vietnam’s total production). The total proven reserves are 61 million barrels, breaking even. The production cost is US$65/barrel. Construction/exploration drilling will begin in the second quarter of 2024, with first production in the fourth quarter of 2025. The main beneficiaries are upstream service providers such as PVS, PVD, and PVB.
It is understood that Vietnam Petroleum Technical Services Joint Stock Company (HN:) is bidding for a central processing platform and a wellhead platform (total contract value of US$283 million), with the expected construction time from 2024 to 2026.
Vietcap Securities (VCSC (HM:)) expects PVS to secure the contract by the end of 2023 or the first quarter of 2024. VCSC currently forecasts that the M&C contract at the Camel Vang mine will contribute US$11 million in total profit to PVS in the period 2024-2028 (3% of PVS’s net profit in the period 2024-2028).
This development means PVS may start construction on the project earlier than VCSC forecasts, equating to the potential for a small upward revision to VCSC’s net profit forecast for the period 2025-2026. In addition, PVS is also bidding for a lease contract for a floating oil storage facility, which is expected to start in 2026, which may increase VCSC’s 2027 net profit forecast.
Not only PVS, the Camel Vang oil field’s FID also brings potential employment opportunities to PetroVietnam Drilling and Drilling Services Joint Stock Company (PVD). Specifically, Camel Vang Oilfield is investigating the market situation for jack-up drilling rigs to drill 800 wells in Camel Vang Oilfield within 2.2 years. PVD is expected to participate in the bid for the project; however, specific details have not yet been announced.
VCSC expects that PVD may start drilling the field from 2026, and the contract value is expected to be US$294 million (approximately PVD’s revenue for one year) based on the field development plan.
From the VCSC’s perspective, the FID for the Camel Vang mine is a positive for domestic exploration and production (E&P) activities from 2024 onwards.
Currently, VCSC expects that domestic exploration and development will enter a new cycle starting in 2024, including the progress of multiple projects such as the B Block Project, the Camel Vang Mining Area and the Dai Hung-Phase 3 Mining Area. The above recovery will support PVS to win more machinery and construction contracts and PVD to win more drilling contracts and well services in the country.
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