Results below expectations — 1H09 PATMI only 38% of consensus FY09E estimates and 41% of Citi’s FY09E estimates. 2Q09 revenues -44% QoQ due to completion of lump-sum Energy Services project, though PATMI increased QoQ as 1Q09 was affected by FX losses from NOK depreciation. Net gearing of 0.5x increased from 0.1x at end-1Q09 due to capex financing. No div declared.

EOC results also disappoint — 1H09 PATMI only 28% of Citi’s FY09E estimate due to delay in Thailand FPSO start-up (originally scheduled for Nov-08). 2Q09 revenue and PATMI contracted 24% and 34% QoQ respectively due to vessel downtime. Net gearing increased to 2.4x from 2.3x in 1Q09 but will be reduced substantially when the Thailand FPSO begins operations sometime in 2H09. EOC management reiterated it has no intention to raise additional equity.

Possible one-off charges from EOC in 2H09 — i) Possible liquidated damages from Thailand FPSO given delay in achieving first gas (originally scheduled for Nov-2008). However, exact quantum is uncertain and was not announced; ii) Writing off capitalized expenses incurred on the Vietnam FPSO bid in the event EOC cannot secure funding for the project. Again, exact quantum is uncertain and depends on negotiations and contractual agreements with Premier Oil.

Still no reason to buy — Reasons: i) FY09E consensus earnings ests. remain too high and may be revised downwards; ii) near-term earnings volatility arising from unhedged NOK position; iii) limited revenue and earnings visibility at EOC; iv) possible one-off charges at EOC. We trim FY09E est. by 10% to factor in project delays but keep TP unchanged at S$0.65. Maintain Sell/High Risk.