Sapura Energy consortium secures RM3b contract in India
Sapura Energy

By FARA AISYAH 

Sapura Energy Bhd’s wholly owned subsidiary, Sapura Fabrication Sdn Bhd, in a joint consortium with Afcons Infrastructure Ltd, has been awarded a contract valued at approximately RM3 billion by Oil and Natural Gas Corp Ltd (ONGC) in India.

Sapura Energy said in a statement yesterday that the consortium will be undertaking engineering, procurement, construction, installation and commissioning (EPCIC) works for a central processing platform and living quarters for the KG-DWN 98/2 NELP block.

Sapura Fabrication’s share in the consortium is 48.3%, which translates to approximately RM1.47 billion in contract value, including all associated costs, such as insurance and the local Goods and Services Tax.

“The new contract win enhances the company’s presence in the growing market and Sapura Energy is pleased to continue its contribution to India’s oil and gas (O&G) industry and in helping meet the country’s increasing energy demand.

“The project is an opportunity for Sapura Energy to participate in a key development for ONGC, leveraging on the company’s established deepwater knowledge and capabilities,” the company said.

The block, located offshore the Godavari Delta on the east coast of India, covers an area of approximately 7,295 km of the Krishna-Godavari basin with water depth ranging between 300m to 3,200m.

The works are expected to be completed by January 2021.

Sapura Energy has proposed a rights issue of new ordinary shares and Islamic redeemable, convertible preference shares (RCPS-i) amounted to RM4 billion in August to reduce borrowings in a bid to enable its businesses to grow independently.

The O&G service provider noted the rights issue includes up to 9.9 billion new shares priced at 30 sen and 998.6 million free warrants.

The rights issue of RCPS-i includes issuances up to 2.4 billion shares at 41 sen each.

As part of its plans in strengthening its core businesses, the company is also mulling the option to list its exploration and production business and forming a strategic partnership for drilling business.

Meanwhile, Sapura Energy posted a net loss of RM31.09 million in the third quarter ended Oct 31, 2018 (3QFY19), against a net loss of RM274.41 million a year ago attributable to higher revenue from its engineering and construction (E&C), as well as exploration and production business segments.

Revenue for the quarter also strengthened by 17.19% yearon- year (YoY) to RM1.5 billion due to increased E&C activities during the quarter.

Sapura Energy president and group CEO Tan Sri Shahril Shamsuddin said the improved results indicate the group’s initial signs of a turnaround.

“We are seeing an upward trend in all segments, in particular the E&C business, driven by an increase in global investments and activities.

“As our orderbook grows, revenue will move up in tandem with project completion from commencement to book recognition,” he said in a separate statement yesterday.

The group’s total contract wins in the current financial year-to-date has reached RM8.5 billion, representing a threefold increase compared to the corresponding period in the preceding year.

Sapura Energy is proceeding with a rights issue of new ordinary shares and RCPS-i amounting to RM4 billion to reduce borrowings in a bid to enable its businesses to grow independently.

Sapura Energy shares rose two sen, or 5.97%, to close at 35.5 sen on the news of the contract award.