Sapura Energy in talks for OMV-like partnership in drilling

The company has been approached by several international companies for a strategic partnership in the drilling biz segment, says group CEO


SAPURA Energy Bhd is currently negotiating with several parties for a potential partnership in drilling as demand for oil and gas (O&G) services are expected to pick up on rising investment in the industry.

President and group CEO Tan Sri Shahril Shamsuddin said the company has been approached by several international companies for a strategic partnership in the drilling business segment.

Sapura Energy inked a deal with Austria’s OMV Aktiengesellschaft recently to sell a 50% stake in its exploration and production (E&P) unit for RM4.06 billion.

“We would like something quite similar as the OMV deal. Other companies have sought us. It depends on the price, the quality of the partner and the ability to penetrate the market we want,” Shahril said after the company’s EGM in Seri Kembangan yesterday.

Sharil said such partnerships would allow Sapura Energy to further participate in the growing demand for drilling services as more fields will be in their development phase in the coming years.

He said Sapura Energy will allocate capital expenditure of between US$200 million (RM840 million) and US$300 million for the gas production segment in the next couple of years.

At the EGM, shareholders passed all six resolutions in conjunction with the proposed rights issue to raise proceeds up to RM4 billion.

Sapura Energy has also agreed to sell 50% of its wholly owned E&P unit Sapura Upstream Sdn Bhd to OMV for RM4.06 billion and a joint-venture company, SEB Upstream Sdn Bhd, is expected to be formed by the first quarter of next year.

Proceeds from both the rights issue and proposed partnership with OMV will be used to repay the group’s debt and for working capital.

Sapura Energy’s total borrowings are expected to reduce to RM9.8 billion from RM16.4 billion as at Jan 31, 2018, thus lowering its gearing ratio from 1.74 times to 0.62 times upon completion of the two corporate exercises.

The integrated O&G service provider’s orderbook currently stands at RM18.2 billion, largely attributable to engineering and construction jobs in Asia and the Americas.

Sapura Energy’s wholly owned subsidiaries Sapura Fabrication Sdn Bhd and Sapura Saudi Arabia have been picked by Saudi Arabian Oil Co (Saudi Aramco) for its long-term agreement programme.

The programme entails engineering, procurement, fabrication, transportation and installation contracts to support Saudi Aramco’s offshore projects.

Sapura Energy’s share price closed at 34 sen, declining by 1.45% or 0.5 sen yesterday.