Merger created biggest local O&G company

  • Nation
  • Saturday, 30 Jul 2016

KUALA LUMPUR: SapuraKencana Petroleum Bhd was listed on the main market of Bursa Malaysia on May 17, 2012, creating the country’s largest integrated oil and gas (O&G) service provider by assets.

The merged entity was the result of a massive RM11.85bil merger exercise of two of the country’s pro­minent O&G players – SapuraCrest Petroleum Bhd and Kencana Petro­leum Bhd – that placed it among the world’s top five O&G players alongside Italy’s Saipem, France’s Technip and the US McDermott’s Interna­tional Inc.

Under a cash and share swap deal, a special purpose vehicle called Integral Key Sdn Bhd bought all the assets and liabilities of SapuraCrest for RM5.87bil and Kencana for RM5.98bil, equivalent to RM4.60 per share and RM3 per share respectively.

Tan Sri Shahril Shamsuddin took over the driver’s seat and was the president and group chief executive officer, who at that time had a stake of 16.71%.

Meanwhile, Tan Sri Mokhzani Mahathir held a 15.93% in the merged entity via his vehicle Khasera Baru Sdn Bhd.

Mokhzani was the vice-chairman besides a non-independent and non-executive director of SapuraKencana.

Meanwhile, his close associate Yeoh Kheng Chew, better known as KC, was a non-independent and non-executive board member.

When it was flying high, SapuraKencana had a market capitalisation of RM29.17bil in December 2012.

In March 2015, Mokhzani and Yeow resigned from SapuraKen­cana’s board, citing personal reasons.

This got the grapevine talking that Mokhzani’s exit from the board had something to do with disagreements with Shahril, his childhood friend, which had taken a turn for the worse.

However, both Mokhzani and Shahril have denied that there were disagreements between them.

Mokhzani’s stake in the company had reduced to 10.1%.

SapuraKencana’s share price took a beating following losses and impairments from plunging oil prices. There were also concerns surrounding its borrowings which was estimated at RM17bil early last year.

However, the company has managed to reduce its borrowings on favourable interest rates. 

The stock was down some 30% on a year-to-date basis. At its current price of RM1.44, it has a market capitalisation of RM8.63bil.

Things appear to be looking up following positive first quarter earnings and renewed optimism from the recent crude oil price recovery.

SapuraKencana continues to clinch new contracts and has an outstanding orderbook of some RM20bil.

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