Myanmar (DBS)

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assets mainly in production phaseOil & gas proxy in Myanmar and Indonesia with

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growth potential further upside from

exploration assets and bids for new licencesSignificant production ramp up to drive nearterm

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moderate risk returnFair value implies 12% potential upside and

The Business

Largest onshore oil producer in Myanmar with 40% market

share. Interra Resources (ITRR) is an oil & gas exploration and

production company with two producing fields in central

Myanmar and two producing fields and one exploration site in

Indonesia. The company currently has about 24.6m barrels of 2P

(proven + probable) reserves and its wells produced close to 1m

barrels of oil last year. Myanmar is the key earnings contributor

at 86% of FY12 EBITDA. ITRR has been in Myanmar since 1996.

Near term growth from higher production, further upside from

exploration. Based on ITRR’s expanded drilling program, oil

production will accelerate over the next five years to drive 24%

earnings CAGR over FY12-14. In the medium term, we see

upside potential from ongoing exploration in Indonesia,

extension of existing contracts, and bidding for new licences.

There is also preliminary discovery of gas in Myanmar which

could be an earnings wildcard if proven material.

The Stock

What is fair value for the stock? We value ITRR at 10% discount

to global comparables’ EV/ reserves multiple of about 18x to

derive a fair value of S$0.57 (details in report).

Dependent on oil prices, ability to renew Indonesia contracts.

Besides changes in oil prices and inherent execution risks in E& P

projects, ITRR’s inability to renew its contracts in Indonesia

would adversely affect earnings and valuation.

At A Glance

Issued Capital (m shrs) 446

Mkt. Cap (S$m/US$m) 227 / 182

Major Shareholders

Saratoga Equity Partner (%) 17.8

Sumodikoro Subianto ARPAN (%) 11.8

Free Float (%) 70.4

Avg. Daily Vol.(‘000) 9,220