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SapuraKencana boss sees tough conditions in 2016 but 'positive' long-term outlook

SapuraKencana boss sees tough conditions in 2016 but 'positive' long-term outlook
Although SapuraKencana Petroleum expects the operating environment in 2016 to remain difficult due to the wild swings in the crude oil market, it has still managed to secure about MYR6bn ($1.5bn) so far this year, bringing its order book to MYR21bn.

“The outlook on the company in the long-term is positive,” local reports quoted president and ceo Shahril Shamsuddin as saying.

With continued volatility in the oil and gas (O&G) sector, there have been concerns that there will be more provisions made during the course of this year after SapuraKencana wrote off about MYR1.4bn in the fourth quarter, bringing the full-year total to about MYR2bn, to reflect oil price weakness.

But analysts said future impairments are not likely to be as significant than what was reported in the fourth quarter as potential future impairments are likely to be due to lower asset utilisation rather than oil price weakness, whereas the fourth quarter impairments were made on SapuraKencana's property, plant and equipment and O&G properties.

In the fourth quarter, SapuraKencana posted a net loss of MYR1.28bn plunging from a net profit of MYR129.1m in the previous corresponding quarter, due to the provisions on impairment of its assets.

It also wrote off deposit on proposed acquisition of O&G assets of MYR172.5m. Several of SapuraKencana’s assets had to be marked to current market prices due to weak oil prices.