PDVSA will begin paying off debts owed to service providers ? It was recently reported in the news that National Oil Company, Petroleos de Venezuela SA ("PDVSA"), will begin paying off debts owed to service providers this week, after falling behind payments to other oilfield services companies & suppliers including Helmerich & Payne, Ensco International, Schlumberger and Halliburton. We believe this is a positive news flow for Jasper, as total amount due to the Group's subsidiary, Neptune Marine & Drilling Pte Ltd ("NMD") amounted to approximately US$19 million which in turn resulted in certain breaches in a loan agreement entered into between another subsidiary, Neptune Marine Invests AS ("NMI"), and certain banks.

PDVSA looking to re-negotiate for lower rates with oilfield service providers. Also reported in the news lately was PDVSA beginning talks with oilfield service providers to lower their rates amid the plunge in oil prices. Oil & Energy Minister Rafael Ramirez further commented that " PDVSA don't accept that service providers to maintain the same rates that they had last year". Given that oil price has fallen 72% since touching a record US$147 in July 2008 coupled with the US$19 million due to NMD, we believe chances of downward revision of day rate are notslim as PDVSA is likely to leverage on the amount due to re-negotiate for lower day rates.

Some downtime experienced by Neptune Discoverer due to failed mooring line in December 2008, resulting in some damage to certain subsea equipment. NMD has since claimed for standby rates from PDVSA as Neptune asserted that the mooring line was the responsibility of thirdparty contractors contracted by PDVSA. However, this claim has been disputed by PDVSA and NMD is currently in discussions with PDVSA to resolve the matter. The repairs to the subsea equipment have been completed and the Neptune Discoverer has resumed operations. We keep our earnings forecast for now, pending notice of the outcome of the discussions.

Downgrade to Hold with target price of S$0.13 We are downgrading Jasper to Hold with target price lowered to S$0.13 using DCF valuation methodology. We raise WACC to 12.8% (previously 10.3%) and set terminal growth rate to 0% for now, factoring a higher risk premium for downward revision of day rates and high client concentration risk given that Neptune Discoverer is the only operating drillship and PDVSA has high bargaining power over Neptune in current market condition. As PDVSA is determined to re-negotiate for lower rates with its suppliers and oilfield services provider, this is likely to weigh on Jasper's share price performance.

3Q09 results release during week starting 9th Feb Jasper will be releasing its 3Q09's results during the week starting 9th Feb. As such, we maintain our earnings estimates for now and will provide updates after Jasper's results release.