Citing sources, The Star said the recent recovery in oil prices has led to Sapura Energy mulling listing as a way to monetize some of its assets to meet cash demands in the near future.
With the recent recovery of oil prices and the better progress made in upstream projects, Sapura Energy’s E&P division is the only one of its divisions that turned in a segment profit during its latest quarter ended Oct 31, 2017.
Local analysts were cited as saying that Sapura Energy’s production had risen to 900,000 barrels of oil equivalent (boe) in the most recent third quarter compared with 800,000 in the second quarter.
Sapura Energy is seen taking advantage of the current higher crude prices to boost revenue and with oil prices forecast to stabilize at the above $60 level, this bodes well for its future fortunes.
After development of the SK310 B15 field offshore east Malaysia was completed in October last year, production is to be progressively ramped up until it reaches optimum levels this month.
Meanwhile production from the PM323 oilfield may also improve after completion of the infill drilling at the East Belumut and West Belumut fields in the last quarter.
Any potential corporate exercise would be aimed squarely at relieving its future financial situation however. Analysts noted that Sapura Energy currently has sufficient revenue from its operations to service interest payments but this is due to a moratorium on principal repayments that its creditors have granted after its debt restructuring exercise last year.
A longer term solution is needed to meet these debt repayments as overall revenue still struggles to keep up and its cash pile dwindles.
Sapura Energy’s cash and cash equivalents dropped to MYR1.89bn ($479.5m) as at Oct 31 compared to MYR3.52bn as at Jan 31. And the situation does not look like its improving, with net cash generated from operating activities in the first nine months of 2017 plunging to just MYR585.5m compared to MYR2.2bn in the previous corresponding period.
This is far short of total liabilities, which stood at MYR22bn as at October last year, while interest payment amount to some MYR600m a year.
As an integrated oil services group with interests also in engineering and construction (E&C) and drilling, Sapura Energy is seen benefitting from potentially better-than-expected order flows as oil prices stay buoyant. However there will be a lagging effect as these take time to flow through and analysts expect earnings prospects to only improve from FY19.
The company has an outstanding order book of MYR15.1bn and has won contracts worth MYR2.8bn year-to-date, with a tender book standing at $5bn.
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
