This article first appeared in The Edge Financial Daily, on May 26, 2016.

KUALA LUMPUR: Puncak Niaga Holdings Bhd is still holding on to its loss-making oil and gas (O&G) business, despite the challenging global O&G environment brought about by low crude oil prices, as the group is confident that the industry will see some improvement next year.

Executive chairman Tan Sri Rozali Ismail said the group is not looking to dispose of its O&G operations, represented by Puncak Oil & Gas Sdn Bhd and its subsidiaries GOM Resources Sdn Bhd and KGL Ltd, any time soon.

“We still have our O&G subsidiaries and maintain some staff to manage our assets. We are not in a hurry to close down the subsidiaries. Even though there are not many jobs, we are still confident.

“At the moment, all of our O&G contracts have been completed, so we don’t have any ongoing jobs. We are still putting in tenders here and there, and are looking for opportunities,” Rozali said at a press conference, following Puncak Niaga’s annual general meeting yesterday.

He said the group’s confidence in the O&G stems from the belief that crude oil prices will stage a rebound, following a sharp decline earlier this year.

“The price of crude oil fell earlier this year, but last week it was trading higher at around US$48 (RM196) to US$50 per barrel, which was encouraging. It is possible that prices can reach US$60 to US$70 by year end.

“We expect conditions to improve further in 2017,” said Rozali.

The group’s O&G business was a drag on the group’s performance for the financial year ended Dec 31, 2015 (FY15), with the segment reporting RM126.69 million in losses, widening the group’s net loss to RM135.27 million from RM7.23 million in the previous year.

Revenue for the year dropped 69% to RM188.69 million from RM606.64 million a year ago.

Meanwhile, Rozali said Puncak Niaga will continue to play a role in the water industry, despite disposing of its water assets last year, as the group eyes opportunities in water and wastewater management, sewerage, environmental engineering and construction, as well as new areas such as oil palm plantation and property development.

For the water business, the group has secured the RM51 million contract to operate and maintain a water treatment plant in Beaufort, Sabah, and the construction of new sewer pipe networks and pumping stations in Bunus, Kuala Lumpur.

On the property development side, the group earlier this year entered into a heads of agreement (HOA) with property developer TRIplc Bhd to acquire the latter’s business.

“We are currently going through the due diligence works for TRIplc, which will probably be completed by the next two months. And after that, we will bring them to the board for deliberation. Altogether, the exercise will take about four to five months to complete,” he said.

Puncak Niaga is also pursuing opportunities in the plantation sector and has identified a potential estate to acquire. Rozali did not reveal the details of the acquisition, but said the group will be making an announcement soon.

“We are a cash-rich company after the disposal of our water assets. Now we are looking into good business to invest in, such as in the water and environmental engineering businesses, plantation, property and also open to mergers and acquisitions.

“We are evaluating several companies now, and will make the announcement soon on the target companies we will be investing in,” he said.