Blog Capsule 4 - Is Seadrill Selling Sapcres or Not?

Since the start of this week, "newbie" made several unsubstantiated comments that Seadrill has been disposing SAPCRES. If my memory serves me right (I could be wrong), I vaguely recalled he first made the comment first on Monday. Certainly, as of yesterday, he repeated them more than once here. His latest was last night, at 11:14 PM.

Note newbie's 23:14 which said "since Sep 30" (which is over 15 days ago) and note "disposing SAPCRES "every day".

Is this true?

Checking Bursa announcement today (lunch time, Wednesday, 15 October), Bursa has not yet made any such announcement, despite well over 2 weeks.

Personally, I doubt this news very, very much for the following reasons:

1. Seadrill has been accumulating SAPCRES since last year. They've gone from zero to 23.4%. The 20% level is a key level, suggesting strategic buying. They would need to have very, very strong reasons to backtrack, as their accumulation price is clearly higher than today's level.

2. They have been consistent net buyer. As far as I am aware, they have never sold Seadrill before. Their latest purchase is on Friday, 19th September, which they reported on Monday, 22nd September. Note their generally prompt report and their practice of never selling.

3. Newbie claimed that Seadrill has been selling "every day" "since Sep 30, which is a Thursday. IF so (and I seriously doubt it), then, this would makes it well over 2 weeks already, and Bursa has yet to report on it. So, the longer Bursa don't announce, the greater the signs of "untruth" here.

Anyway, this morning, I noticed a couple of chatters - Windsurfer and Moolah - has already queried newbie, and I also left a comment for newbie at 8:48 AM. Others like "ezi" also started querying where newbie got this source, since it is not reported in Bursa.

newbie finally joined the chatbox at around 11 AM, not his usual behaviour.

After my query, newbie said "Seadrill has sold or has been selling thru CLAS broking firm no. 35" at 11:03 AM.

When queried by cycle, he said he doesn't know how much Seadrill have sold at 11:07 AM.

At 11:11 AM, he asked me "Seng, wat if Sea drill sold just a tiny percentage of their holdings must they announce?" (Note the "what if")

At 11:15 AM, newbie claimed that his remisier knows this.

At 11:16 AM, newbie claimed his remisier told him this and repeated "Seadrill selling thru CLAS".

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Anyway, the purpose of this blog capsule is to see whether newbie is telling the truth or just spreading a false rumour at a critical and sensitive time.

Price wise, SAPCRES found bottom on Monday AM, I suspect many in my chatbox started buying when the price was around or below 92 sen on Monday PM. I suspect many held it overnight Monday night, started selling on Tuesday, but continued to hold overnight on Tuesday night also. On Tuesday night, US markets profit take, and Bursa KLCI was down 16 points at today's lunch time.

So, the timing of newbie's rumour has the potential to cause a major fall to SAPCRES price, because of the sensitivity of the news - Seadrill is the MAJOR reason that makes SAPCRES a bullish case, and the absence of Seadrill means the stock price has the potential to fall.

Also, the timing of newbie's rumour is "good" (i.e. good if you want SAPCRES price to fall), because it creates additional uncertainty, when overall recent uncertainty was already at its highest.

There is no doubt in my mind what newbie wanted to do with his rumour since Monday. All experienced traders and knowledgeable investors also knows exactly what newbie was trying to do.

I am naturally dissappointed with newbie's behaviour. But at the same time, nothing is certain in stock markets, and newbie could actually be doing us a favor, if it was the truth. But the manner in which he spreads rumours and the manner in which he does this more than once - speaks very loudly in itself also.

Anyway, this is a blog capsule. Let's see whether newbie (or as he claimed, his remisier) has been telling the truth. The truth shall come out later anyway, one way or another.

SAPCRES News

For future reference. Full link here - http://www.btimes.com.my/Current_News/BTIMES/Tuesday/Latest/20080701174516/Article/index_html

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SapuraCrest bidding for RM7b jobs

Published: 2008/07/01

SAPURACREST Petroleum Bhd is bidding for oil and services jobs worth between RM6 billion and RM7 billion, comprising 70 per cent local and 30 per cent overseas.
(Seng comment: Looks like Sapcres is relying to secure more local jobs than overseas.)

Its chief executive vice-chairman, Datuk Shahril Shamsuddin, confirmed that one of the local jobs was the Gemusut deepwater exploration but declined to disclose the value.

He, however, said it expected to know the outcome by year-end.
(Seng comment: A lot of things can happen by year-end. E.g. markets can fall or rise, causing all boats to fall or rise.)

The oil and gas services provider already has presence in India, Australia, Indonesia, Thailand, Cambodia, Myanmar and Vietnam, he told reporters after the company’s annual general meeting today.

Its current order book of RM5 billion will last for about 30 months.
(Seng comment: This is a decent order book size, but much depends on the margins. At 5%/10%/20% net margins, it translates to $250M/$500M/$1 Billion. If past net of tax margins are any indication, then, it's not a pretty picture since it is closer to $250M, which is small relative to its market capitalization including warrants of around $1.7 Billion.)

The order book includes RM3 billion three-year extension to an on-going contract with Petronas Carigali Sdn Bhd and the RM600 million contract from Murphy Oil Co Ltd for the Kikeh project in Sabah.
(Seng comment: I know nuts about actual specific detailed oil and gas business, but these to me seem like decent trophy names of clients for Sapcres - Petronas and Murphy Oil, although you probably can't read too much into it.)

Others include RM500 million regional contract from Carigali-PTTEPI Operating Company Sdn Bhd and a RM200 million one-year extension to an on-going contract with Exxon Mobil Exploration and Production Malaysia Inc.

Meanwhile, its chief executive officer, Izzet Ishak, said overseas operations contributed up to 30 per cent to the company’s revenue now.

“We hope to increase it to 50 per cent in two years and maintain it,” he said. — Bernama