Sapura Energy records RM1.5b net loss

By NUR HAZIQAH A MALEK 

SAPURA Energy Bhd has posted a net loss of RM1.52 billion in the second quarter ended July 31, 2021 (2Q21), against the previous year’s net profit of RM23.74 million. 

Its group CEO Datuk Mohd Anuar Taib said the group faced similar challenges with its industry peers, bearing the brunt of both the direct and indirect costs of the Covid-19 pandemic. 

“We are currently negotiating amicable solutions with our clients, but in these extraordinary times, clients are cautious and reluctant to resolve claims quickly,” he said. 

The group’s revenue for the quarter was also much lower at RM747.12 million against last year’s corresponding quarter’s revenue of RM1.22 billion, posting a decline of 38.7% due to lower revenue recognition from the engineering and construction, and operations and maintenance business segments. 

Its net loss was also much greater due to lower percentage of completion recognised for projects in the current quarter, as well as recognition of foreseeable losses and higher costs for certain projects.

The accumulated Covid-19 direct costs have escalated to RM397 million in estimation as of the quarter under review, with RM111 million having been incurred in the first half (1H) of the financial year.

Mohd Anuar said the consequential costs arising from these can be between twice to four times, depending on the type of project. “We are intensifying and hastening the pace of our ‘Reset’ journey.

“We are reviewing the group’s capital structure and financial framework, as well as the operating model and future business direction,” he said. 

The impact of the pandemic to operations and project execution delays in Taiwan and India resulted in the group’s performance for the current quarter, and it expects the hurdles to continue in the 2H of the year. 

It is currently engaging with parties and lenders on short- and long-term portfolio actions to expedite improvements in cashflow and debt situation. 

Sapura Energy chairman Tan Sri Shamsul Azhar Abbas said the group has set up a Board Restructuring Taskforce to provide oversight and support to the management team.

“The board will be working hard with management and key stakeholders, especially lenders, to turn around the group as soon as possible,” he said. 

In other developments, the oil and gas service company has won three new awards in Australia and Brazil. 

Santos WA Northwest Pty Ltd Limited recently announced Sapura Projects Pty Ltd, an indirect wholly-owned subsidiary of Sapura Energy, is awarded a contract for FEED for the design, construction and installation of the Wellhead Platform for the Dorado project in the Bedout Sub-basin, offshore Western Australia 

Santos also awarded Sapura Projects a contract for the transportation and installation of the spartan and spar halyard umbilical replacement at its John Brookes wellhead platform, where the completion of the work is slated for 4Q22. 

Both of the aforementioned awards are valued at RM942 million. 

In total alignment with the approach, Sapura Energy’s current bid book stands at RM35 billion, lower than the RM54 billion reported in the previous quarter.