KUALA LUMPUR (Sept 27): Sapura Energy Bhd, which reported its second consecutive profitable quarter on Wednesday, said it has secured a US$300 million (RM1.4 billion) contract from Azule Energy Angola BV for a gas complex in Angola — the Angola Northern Gas Complex (NGC) project.
The contract's scope of work comprises engineering services, transportation, installation and related activities for the Quiluma and Maboqueiro Platform of the Angola NGC project, according to Sapura’s stock exchange filing on Wednesday. The works are expected to be completed by the fourth quarter of 2026.
In a statement released together with Sapura’s quarterly results, the group said the Angola job is a “notable” win for the group, raising its order book to RM6.3 billion, of which over 60% of its contracts are for jobs outside Malaysia.
Sapura said it remains committed to its strategic direction of rebalancing its global portfolio and deploying key assets in regions where it can be competitive.
“We are actively repositioning ourselves geographically to seize opportunities across all our business segments, bidding right and pursuing major projects in Africa, the Mediterranean, the Atlantic and the Asia-Pacific region,” said group CEO Datuk Mohd Anuar Taib. “The trusted partnerships we have built with clients have helped us to navigate limited liquidity issues, enabling us to win more work."
For the second quarter ended July 31, 2023 (2QFY2024), Sapura reported a net profit of RM42.81 million or 0.27 sen per share, versus a net loss of RM2.59 million or 0.02 sen per share a year ago.
Sapura attributed 2QFY2024’s profitability to lower depreciation, higher share of profit from joint venture and associate, as well as favourable foreign exchange gain from the appreciation of US dollar against the ringgit.
Revenue, however, dipped 2.5% to RM1.14 billion in 2QFY2024 from RM1.17 billion in 2QFY2023, mainly due to the completion of a project under its drilling businesses.
The group's earnings before interest, taxes, depreciation and amortisation (Ebitda) also dropped in 2QFY2024 compared to the preceding quarter, mainly due to project delays within its engineering and construction (E&C), and operations and maintenance (O&M) business segments.
Its drilling business segment, meanwhile, continued to demonstrate robust performance, the group said, driven by lower operating expenses and the commencement of new contracts.
“The exploration and production business segment, operated through the SapuraOMV Upstream joint venture, also maintained consistent performance during the reviewed quarter, albeit with a slight decline in average gas production, mainly due to a scheduled shutdown,” it said.
For the first six months of FY2024 (1HFY2024), the oil and gas engineering firm’s net profit more than doubled to RM188.89 million from RM89.34 million in the previous corresponding period, while revenue grew 1.7% to RM2.09 billion from RM2.06 billion.
Sapura said its 1HFY2024 results showcased its resilience in overcoming multiple operational challenges, including escalating project and financing costs, as well as a lack of access to bank guarantees and working capital, which in turn affected order book replenishment.
“We are building on our steady recovery to set the stage for future growth. To maintain this positive momentum, we will continue to improve the group’s cashflow and Ebitda, and strengthen operational efficiencies to protect project margins and drive consistent results,” said Mohd Anuar.
“Addressing our unsustainable debt remains a crucial part of our sustainability, and we will continue to make every effort to resolve this with all relevant stakeholders,” he added.
As part of Sapura’s debt restructuring, the group said it has validated RM1.5 billion worth of overdue claims from approximately 2,000 trade creditors.
“Operationally, we continue to geographically reposition ourselves to capture opportunities, in particular with E&C and O&M segments. Meanwhile, drilling remains the group’s solid base with 10 rigs contracted to clients across Thailand, Malaysia and Africa. Furthermore, the divestment of the group’s 50% stake in SapuraOMV is ongoing,” said Sapura.
“The group will continue its effort to address the unsustainable debt and Practice Note 17 status, facilitated by CDRC (Corporate Debt Restructuring Committee), and is hopeful of reaching a principal agreement with its MCF (multi-currency financing) financiers by end of this year,” it added.
Sapura Energy shares gained half sen or 10% to close at 5.5 sen on Wednesday, giving the group a market capitalisation of RM878.85 million.