KUALA LUMPUR (April 22): Investors of Sapura Energy Bhd await the material announcement hinted at last Friday's noon break by the oil and gas (O&G) services company, which is in the midst of formulating a regularisation plan to address its Practice Note 17 status.
Shares in the company, which undertakes upstream operations and maintenance, offshore fabrication, and drilling services, have been voluntarily suspended from trading since 2.30pm last Friday afternoon.
The suspension points to potential sale of its 50%-owned upstream unit SapuraOMV Upstream Sdn Bhd.
The other 50% stake in SapuraOMV is in the process of being acquired by TotalEnergies from Austria’s OMV Aktiengesellschaft for US$903 million (RM4.32 billion). OMV sold the stake as part of its group strategy that shifted its focus away from Australasia.
OMV bought into SapuraOMV back in 2018 by subscribing to a 50% stake for US$540 million, plus repayment of US$350 million in intercompany debt.
It was reported that Sapura Energy was looking for US$1.2 billion for its stake in SapuraOMV. The upstream business was acquired by Sapura Energy back in 2014 – when it was called Sapura Kencana Petroleum Bhd – from Newfield Exploration Co for US$898 million.
SaspuraOMV operates the Sarawak gas fields of SK310 (with a 30% stake) and SK408 (40% stake). It also owns 40% of Block SB412 offshore Sabah, and 30% of Block 30 offshore Mexico, as well as other offshore exploration permits in Western Australia and the Taranaki Basin in New Zealand.
TotalEnergies’ transaction price for the 50% stake in SapuraOMV is bigger than Sapura Energy’s market capitalisation of RM826.92 million, based on its last traded share price of 4.5 sen prior to the suspension.
As at end-January, Sapura Energy had negative total equity of RM4.19 billion, against cash of RM1.45 billion and gross borrowings of RM10.98 billion.
The group is in the midst of coming up with a regularisation plan to address its balance sheet position. At the moment, it has been given until June 10 by the courts to restrain any legal action by creditors, including local vendors and those for its RM10.3 billion multi-currency financing facilities.
At least 75% of these creditors have provided requisite approval-in-principle for its proposed debt restructuring scheme, back in December last year.
Shareholders of Sapura Energy include Permodalan Nasional Bhd via Amanah Saham Nasional Bhd (40.73%). Brothers Capital Sdn Bhd, linked to Tan Sri Shahril Shamsuddin and Datuk Shahriman Shamsuddin, owns a 12.94% indirect stake in the listed entity. Shahril also owns a 1.09% direct stake in Sapura Energy.
Aside from SapuraOMV, Sapura Energy’s other assets include fabrication yards in Lumut, Perak (273 acres or 110.48 hectares), Labuan (88 acres), and Teluk Kalong, Terengganu (20 acres).
It has five derrick lay vessels, six pipelay vessels, one subsea construction vessel, two anchor handling tug supply vessels, and other offshore support vessels. Sapura Energy also has five semi-tender rigs and six tender assist rigs, its official website showed.
Shares in the company, which still has vast presence across the local upstream oil and gas ecosystem, touched six sen apiece in the third quarter of 2023, following a quarterly net profit of RM146.1 million for the first quarter ended April 30, 2023 (1QFY2024) that was its strongest since 2019.
However, the group remained in the red in FY2024 as all segments bled, with a full-year net loss of RM728.4 million on revenue of RM1.1 billion. In the year, financing costs totalled RM805.51 million, against net operating cash flow of RM311.29 million.
Chairman Datuk Mohammad Azlan Abdullah said in March that Sapura Energy is “not yet out of the woods” following the results, with the group citing lack of funding access as adding to the challenging operating conditions for both its engineering and construction division, and the operations and maintenance division.
The group, which initiated the latest round of its restructuring plan in 2022, had an order book of RM5.4 billion at end-October last year. As the wider domestic O&G industry continues to see a pickup in activities and prospects, the attention will also be on the progress of Sapura Energy’s turnaround.