Sapura Energy plunges on Q3 loss

Group gets lower contributions from engineering, construction

PETALING JAYA: Sapura Energy Bhd’s shares plunged about 20.2% after the company slipped into the red for the third quarter (Q3) of its financial year ending Jan 31, 2018.

The oil and gas services company suffered a net loss of RM274.4mil for the three months to October 2017 compared with a net profit of RM158.06mil a year ago.

The losses were due to lower contributions from its engineering and construction (E&C) and drilling segments as well as lesser share of profit from joint ventures.

The lower contribution from joint ventures was due to a share of loss in the disposal of vessel from SapuraAcerby amounting to RM46.1mil.

Sapura Energy’s shares fell 24.5 sen yesterday to close at 96.5 sen, with 128.5 million shares changing hands.

The company’s net loss exacerbated the selling pressure on its shares following the recent exit of Tan Sri Mokhzani Mahathir from the group.

According to a filing with Bursa Malaysia, Mokhzani ceased to be a substantial shareholder of Sapura Energy after selling almost 385 million shares in the company on Nov 7. He was expected to have netted RM578mil in proceeds from the share sale based on the stock’s closing price of RM1.50 that day.

Mokhzani, who held a 10.1% stake in Sapura Energy of 605 million shares prior to the sale, had been paring down his stake in the company in recent years.

Notably, in February 2014, four months before the collapse of crude oil prices, Mokhzani via Khasera Baru sold 190.3 million shares in Sapura Energy, which was then still known as SapuraKencana Petroleum Bhd, at a price of RM4.30 apiece. This gave them proceeds of RM820mil.

For the quarter under review, Sapura Energy reported a loss per share of 4.62 sen, compared with an earnings per share of 2.66 sen in the previous corresponding period.

The group’s revenue declined 42% to RM1.28bil in the third quarter from RM2.22bil in the previous corresponding period.

Sapura Energy said industry conditions remained challenging and its performance was a reflection of the prolonged low levels of capital spending within the industry.

Moving forward, the group said it would focus on replenishing its orderbook in its existing markets as well as in new markets.

It added that its exploration and production (E&P) segment had completed its first gas development project, the SK310 B15 field, which would contribute to revenue going forward.

“The board anticipates the challenging environment to persist in the short and medium term.

“However, the board is currently considering various strategic and operational plans to mitigate the impact and improve its competitive position.”

In the quarter under review, the group’s E&P segment recorded a higher revenue of RM207.7mil, or RM11.2mil higher than RM196.5mil recorded in the previous corresponding quarter, owing to higher barrels of oil lifted and improved average realised oil price.

However, its drilling segment saw revenue sink 45.4% to RM251.2mil on a year-on-year basis due to certain rigs being off-contract during the quarter.

The segment incurred a loss of RM93.1mil as compared to a pre-tax profit of RM34mil in the previous third quarter.

Revenue in the E&C segment was halved to RM1.57mil in line with lower activities during the current quarter. The segment recorded a pre-tax loss of RM29.3mil compared to a pre-tax profit of RM274.1mil in the year-ago quarter.

Year-to-date, Sapura Energy made a net loss of RM217.94mil compared to net earnings of RM380.64mil for the nine months to October 2016, while revenue dropped to RM4.7bil from RM5.84bil.

Loss per share for the cumulative period stood at 3.66 sen versus earnings of 6.4 sen a share previously.

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