Seadrill offers 230m SapuraKencana shares for sale

PETALING JAYA: SapuraKencana Petroleum Bhd’s second largest shareholder, Seadrill Ltd, has reduced its stake in Malaysia’s biggest independent oil and gas contractor by offering up to 230 million shares at the market’s close yesterday.

In a placement done via a book-building exercise, the shares were priced at RM4.30 each, valuing the deal at RM989mil.

Shares in SapuraKencana were last traded at RM4.45 yesterday.

Sources said the deal had attracted strong interest from local and foreign long-term institutional funds.

Following the transaction, Seadrill’s interest in SapuraKencana will be reduced by 3.8% from 12%.

According to the term sheet seen by StarBiz, Seadrill has offered to sell at least 180 million shares in SapuraKencana, but is prepared to upsize the deal to as much as 230 million shares.

Maybank Investment Bank Bhd is the sole placement agent for the deal.

The move by Seadrill to cut its stake in SapuraKencana comes barely two months after Khasera Baru Sdn Bhd, a private vehicle where Datuk Mokhzani Mahathir is a substantial shareholder, sold 190 million shares in the company.

After the sale, Khasera owns 10.1% of SapuraKencana, behind the Employees Provident Fund which has a 11.64% stake in the company. The sale by Seadrill will scale down the Norwegian oil driller’s position to the fourth-largest shareholder in SapuraKencana.

The group’s president and chief executive officer Tan Sri Shahril Shamsuddin is the single largest shareholder in the company with a 15.9% equity interest.

It is learnt that Shahril had been informed by Seadrill of its decision to divest part of its interest in SapuraKencana. “They have been shareholders for some 10 years and have informed Shahril,” said a source.

SapuraKencana was created in early 2012 following the completion of an RM11.9bil merger between Shahril’s SapuraCrest Petroleum Bhd and Mokhzani’s Kencana Petroleum Bhd.

The enlarged group is currently worth RM26.66bil, while its order book has grown two-fold since the merger from RM13.5bil to RM26.9bil.

This will be the second time Seadrill has placed out part of its shares in SapuraKencana.

The first time was right after the merger was completed when the Norwegian company sold 300 million shares, equaling to 6% of the SapuraKencana group at that time for RM2.12 each.

The disposal reduced its equity interest in SapuraKencana to 6.4%, but Seadrill’s shareholding went back up again to 12% in April last year after the sale of its tender rig business to the former. Seadrill received 490.8 million shares as part of the consideration for the sale.

The acquistion increased SapuraKencana’s rig assets from eight in 2012 to 21 at present, giving the company a 56% market share in the global tender rig space.

So far this year, SapuraKencana has secured three rig charter extension contracts and one new rig charter contract, which is collectively worth RM1.5bil up to 2017.

Seadrill has two board representatives in SapuraKencana, and is the company’s strategic asset-operating partner.

Meanwhile, the company is looking at its first full-year contribution for its newly acquired Newfield project.

The Newfield project is currently producing between 20,000 and 23,000 barrels of oil a day.

“While the Seadrill and Newfield acquisitions have proven to be massively transformative for SapuraKencana, we believe the company is set to chart a new growth trajectory in the financial year ending Jan 31, 2018 when Newfield’s gas fields kick in, with production that could go up to 20 years,’’ CIMB Research said in a recent note.

CIMB Research has a target price of RM6.75 for SapuraKencana, while Maybank IB Research has valued the stock at RM5.30.

But despite its robust growth outlook, the stock is under pressure in 2014. The counter has fallen 9.2% year-to-date after hitting a record high of RM4.96 on Dec 30, 2013.

Mokhzani relinquished his executive post in the company in January, later paring down his stake in February.

The latest disposal by Seadrill could be an opportunistic move by the Norwegian company to raise cash and shore up its own dwindling fortunes. Shares in the Oslo-listed firm have fallen 28% from a recent peak, largely on valuation concerns.