KUALA LUMPUR (Dec 3): AllianceDBS Research has downgraded UMW Oil & Gas Corporation Bhd (UMWOG) to “Hold” at RM2.48 and slashed its target price to RM2.70 (from RM4.15) and said the continued weakness in crude oil prices has prompted the research house to move UMWOG’s earnings and valuations to its bear case scenario.
In a note Wednesday, AllianceDBS Research analyst Arhnue Tan said she now expects crude price to average US$70-80/barrel in 2015 instead of US$95.
Tan said the lower crude oil prices making jack-up rig market more challenging
“Cut earnings by 20-25% after factoring in lower daily charter rate (DCR) and utilisation
“Downgrade to Hold, cut target price to RM2.70,” she said.
Tan said that with a softer market outlook, the impact of new rig deliveries would hit the rig market harder than previously thought.