Why KrisEnergy Jumped 6% Today

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of KrisEnergy (SGX: SK3) had closed 6% higher today at S$0.79. KrisEnergy is an upstream oil & gas outfit that focuses on the exploration and production of oil fields. Currently, the company has interests in oil fields around Southeast Asia and Bangladesh. It plans to be an owner of multiple assets in the oil and gas fields found in Asia.

Prior to its listing on Singapore’s Mainboard exchange in 2013, KrisEnergy was owned by a US-based private equity firm, First Reserve. In 2012, the conglomerate Keppel Corporation (SGX: BN4) had made an investment into KrisEnergy as well and is currently the company’s largest owner with a 31% stake.

So what: The company had revealed at noon today that it has completed the purchase of an oilfield plot in Thailand that’s named G10/48.

G10/48 covers an area of 4,696 square kilometres and is located in the southern part of the Pattani Basin in the Gulf of Thailand. KrisEnergy is expecting to start production in the area in the second half of 2015 from the Wassana oil discovery that’s found within G10/48.

Production from the Wassana oil plot “is expected to peak at 10,000 bopd [barrels of oil per day]”. With the current price of oil hovering above US$100 per barrel, that is a potential revenue stream of US$1 million a day or US$365 million a year. With KrisEnergy’s current revenue at only US$69 million, the potential increase in revenue – if production at Wassana is successful – is huge.

Now what: The company has already assembled the team that’s needed for developing the oil field. However, given the complexity and time needed for the company to bring the Wassana oil discovery up to its full-production-potential, investors should be prepared for a long wait for the oil discovery to add to the company’s results in a meaningful way if they are invested in the company.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.