Analysts maintain a buy call in Deleum Bhd

Kuala Lumpur, [19-Feb-2025)] – Deleum Berhad (Deleum) has reinforced its presence in Malaysia’s oil and gas sector with a significant contract win. Its wholly owned subsidiary, Deleum Oilfield Services Sdn Bhd (DOSSB), has received a Letter of Award from PETRONAS Carigali Sdn Bhd (Carigali) for the provision of slickline equipment and services.

The contract, set to take effect in April 2025, spans five years and aligns with PETRONAS’ commitment to maintaining well integrity and optimizing production efficiency. Slickline services play a crucial role in well maintenance, intervention, and diagnostics, indicating continued confidence in Malaysia’s upstream energy sector.

Growth Potential & Risks

Analysts remain optimistic about Deleum’s growth prospects, citing the contract as a positive step towards strengthening its financial performance from FY25 onwards. The slickline equipment market ranges from USD100,000 to USD500,000, while service costs vary between USD5,000 and USD50,000, depending on well complexity and location.

Despite the contract win, industry risks persist, including skilled labor shortages, rising operational costs, and regulatory uncertainties. However, Deleum’s expertise in slickline operations is expected to mitigate these challenges effectively

Buy call

Market analysts maintain a BUY call on Deleum, with a target price of RM1.97, pending further financial results for FY24. The latest contract award reinforces Deleum’s position in Malaysia’s oil and gas services sector, underscoring its potential for sustained growth in the coming years. Source: MIDF

More Business News