Sapura Energy 2Q23 net loss narrowed to RM2.6m

by NURUL SUHAIDI / pic source:

SAPURA Energy Bhd’s net loss decreased by 99.8% to RM2.59 million for the second quarter ended July 31, 2022 (2Q23), from RM1.52 billion for the same quarter on corresponding year.

This is due to progress in its claims and settlements, as well as improved rig utilisation and the completion of construction projects.

For the cumulative six months ended July 31, 2022 (1H23), Sapura Energy recorded a net profit of RM89.34 million against a RM1.61 billion net loss.

This was despite revenue falling 7.2% to RM2.06 billion, from RM2.22 billion, in 1H23.

Meanwhile, the group’s revenue increased 57% higher to RM1.17 billion than RM747.1 million in 2Q22.

Higher revenue was mainly attributable to the higher revenue recognised from all business segments from a higher percentage of completion of projects executed and higher utilisation of rigs in the current quarter.

It noted that the earnings per share also lowered to 0.02 sen in 2Q23 from 9.5 sen last year.

In a statement, the group credited part of the improved result due to materialisation of additional claims in operations and maintenance, as well as commercial settlements from specific contracts in its engineering and construction businesses for some of the improved results.

The group recently completed the disposal of its pipelaying and crane vessel (Sapura 3000) and will be seeking requisite approvals for the disposal of three drilling rigs — Sapura T-19, Sapura T-20 and Sapura Setia.

On its debt restructuring, it said the efforts to resolve its unsustainable debts are also moving as planned and the group is progressing its proof of debt exercise with its trade creditors.

In addition, the group continues to engage with its lenders to restructure its outstanding borrowings corresponding to the Proposed Restructuring Scheme.

Sapura Energy recently sought assistance from the Corporate Debt Restructuring Committee (CDRC), and said will continue to abide by CDRC’s Participant’s Code of Conduct to mediate its debt restructuring negotiations with lenders.

Moving forward, Sapura Energy continues to execute its Reset Plan to turn around the group and create a stable platform for its operations.

Among the strategy is maintaining its focus on two operational hubs in the Asia Pacific and Atlantic regions.

Sapura Energy said it is currently executing close to 90 projects globally, nine of which commenced in 2Q23, with 18 projects completed in the same quarter.

The group’s bid book currently stands at approximately RM24.4 billion, while its orderbook is at RM7.7 billion.

Notwithstanding the orderbook value at its three-year high, Affin Hwang Investment Bank Bhd expects the company to remain in losses.

“Key issue remains in bringing down its massive cost base, which would prove to be a challenge. With debt structuring in limbo, asset and business divestments are likely to continue to raise working capital. 

“As such, we reiterate our ‘Sell’ rating with an unchanged 12-month sum-of-the-parts valuation derived target price of RM0.01,” the research house said.