The new Petronas CEO

From the Edge:

Finding the balance now falls to Wan Zulkiflee, 54. He’ll succeed Shamsul Azhar Abbas as president and chief executive officer of Petroliam Nasional Bhd. in April, Prime Minister Najib Razak said in a statement via state news service Bernama yesterday.

Wan Zulkiflee is currently chief operating officer and head of Petronas’ downstream business. He oversees the company’s $27 billion spending plan in a refining and petrochemicals project in the southern Johor state bordering Singapore.

That’s one of two major investments Petronas is working on, the other is a C$36 billion liquefied natural gas project in Canada’s British Columbia.

The previous Petronas CEO was fairly unpopular among the political elite, so I suppose it is no surprise a new CEO will be taking the helm in a few months.  ex PM Tun Dr. Mahathir Mohammed has criticized the oil giant for using more international companies in contracts than domestic ones.

Perhaps this will earmark a new phase in domestic oil services expansion.  Another criticism of the previous CEO was a cut in operating expenditures due to the oil price.  I haven't any clue whether this may be influencing the firing, but it could be a factor as domestic money seems to be more important than ever as Malaysia braces for GST and the Ringgit keeps on tumbling.

Judging by the excerpt, the new boss does concentrate on the spending side of things. So the possibility for a higher boom in spending for oil prices is possible.  If he wants to keep his job, I think he will not make decisions too liberally as the previous one did.

Yinson Technical Analsyis

Yinson is one of the current darlings of the KLSE with a very conservative business model.  It builds and oversees the initial process of shipbuilding and christening of FPSO, a large tanker that functions as an oil platform.  Then it matches the long term lease contracts with loans it will take out based on long term rates. 

They basically say, here is the US giving such good long term rates, lets take advantage and borrow money to build vessels for the oil and gas industry, then enter into long term lease rates, then make money off the spread.  They retain the vessel at the end of the day while gaining income off the spread between the rates they charge and what they borrow.

Their stock price has been on a tear the last few weeks with lots of profits oozing.

The analysis of this chart is relatively simple.

1.  The pullback at q2 in 2014 seems to be a turning point.  The market made a solid test below the consolidation point in q1 then moved higher immediately.  At this point the market is indeed bullish.

2.   Buyers were waiting for a pullback.  The buyers got what they wanted in the begining of Q4, but immediately sold off before breaking the Q4 consolidation's high, no doubt because of the severity of the drop at the end of Q3.

The market may encounter resistance at the consolidation over RM 3 a share as bears did manage to try and sell down just below the high of the Q3 consolidation box.  But a move above the Q3 consolidation will likely be another bullish turning point.  

If the market were to make a high past the Q3 consolidation box,  one of two things can happen, it can rocket higher to its Q3 high or it could pullback and consolidate once again.  At the moment, Yinson might range, but I wouldn't be surprised if it tends towards the bullish side as it's creeping up to RM 3 a share once again.

Sapura Kencana Technical Analysis SKpetro

Sapura Kencana was one of the darlings of the oil and gas industry.  Unfortunately with oil hitting all time lows, their outlook looks dim.  I won't mince words, bottom catching is usually a fools game, especially a stock with low dividends.  As goes the saying, if you look around the room and don't know who the sucker is, the sucker is you.

I'll just have you know, a few oil stocks have looked technically strong off a bottom, especially in the US, but technicals seem to have failed this industry as bottoms have not held up.  I won't be surprised if the same goes for SKpetro.  All in all I'd skip this stock, save your money for another rainy day.

But for you people who REALLY want to get into the stock, I don't mind thinking about a long position with play money of course :)

1.We seem to have found a bottom at RM 2 a share.  Is this a bottom that will hold up?  I think it may.  at RM 2.61 is a 30 percent rebound off the lows, and given the nature of the rebound at this particular price, I think the outlook would be good.  I'd cut and run from a long position at a price lower than RM 2 a share, but seeing how this is an oil and gas stock, bottoming technicals seem like having a 50-50 chance of holding.