Sapura Energy back in black, shares jump 14.3%

PRACTICE Note 17 (PN17) company, Sapura Energy Bhd, returned to the black for the third quarter ended Oct 31, 2022 (3Q23), with RM10.18 million net profit compared to a RM669.34 million net loss in the previous year’s corresponding quarter. 

The improvement is due to lower recognition of provision for foreseeable losses; lower project costs recognised; lower depreciation; higher share of profit from associates and joint ventures; and a favourable foreign exchange gain during the quarter, it told the stock exchange yesterday.

Revenue, however, fell 12.42% to RM1.28 billion from RM1.46 billion a year ago, amid lower revenue recognised from the engineering and construction (E&C) business segment from a lower percentage of completion of executed projects. 

It posted a 0.06 sen earnings per share for the quarter, against a loss-per-share of 4.19 sen in the prior year. 

For the nine months period, the group posted a cumulative net profit of RM99.53 million, compared to a RM2.28 billion cumulative net loss a year earlier. 

However, nine-month cumulative revenue declined 9.24% to RM3.33 billion from RM3.67 billion.  

Group CEO Datuk Mohd Anuar Taib said the oil and gas provider is focused on improving its cashflow and earnings before interest, taxes, depreciation and amortisation (Ebitda), as well as strengthening its risk management and operations for long-term sustainability.

“At the same time, we are fully cognisant of the pivotal importance of addressing our unsustainable debt, which we will continue to make every effort to resolve with all relevant stakeholders,” he said in a separate statement.

As part of its efforts to improve overall cashflow, Sapura Energy is committed to continuing its review of underperforming contracts as well as renegotiating commercial settlements with customers.

Sapura Energy faces a drawback in efforts to rebuild its orderbook, given the limited access to bank guarantees and working capital facilities during its restructuring phase, particularly impacting the engineering and construction, and operations and maintenance business segments.

Its drilling arm however, recorded a strong growth with 10 out of the 11 rigs fully operational at the end of 3Q23.

The group’s orderbook currently stands at RM6.8 billion. Separately, the non-consolidated orderbook of the group’s joint venture entities is approximately RM5.7 billion. 

In line with its aim of portfolio rationalisation, Sapura Energy recently completed the disposal of three drilling rigs to NKD Maritime Ltd.

Following the Corporate Debt Restructuring Committee of Malaysia’s (CDRC) agreement to assist Sapura Energy in mediating its debt restructuring with lenders, the group submitted a draft Proposed Restructuring Scheme (PRS) to the CDRC on Sept 29, 2022. 

“It has since been participating in CDRC-mediated meetings with financial institutions to seek feedback on and to refine the terms of the PRS. This draft restructuring proposal will form part of the group’s overall restructuring and regularisation plan which, upon finalisation, will be submitted to Bursa Malaysia.

“Additionally, the group is nearing the end of its Proof of Debt exercise with its trade creditors,” Sapura Energy added. 

Shares of Sapura Energy’s climbed 14.29% or half a sen to close at 4 sen yesterday, valuing the group at RM639.16 million. Year-to-date, its share price has fallen 20%. — TMR / pic source sapuraenergy.com