Kuala Lumpur, 27 June 2022
Summary of Q1 FY2023 financial results:
- Revenue of RM886 million
- EBITDA of RM250 million
- PATAMI of RM92 million
- New contract wins of RM2.5 billion, and RM0.2 billion new win by a joint venture company
Sapura Energy Berhad (“Sapura Energy”) and its group of companies (“Group”) announced positive financial results in the first quarter of financial year 2023 (“Q1 FY2023”), posting Group profit after tax and minority interests (“PATAMI”) of RM92 million, on the back of earnings before interest, taxes, depreciation, and amortisation (“EBITDA”) of RM250 million and revenue of RM886 million.
Sapura Energy improved its performance from the preceding quarter ("Q4 FY2022"), when it posted a loss after tax and minority interests (“LATAMI”) of RM6.8 billion. In the same quarter, the Group recorded an operating loss of RM1 billion on the back of RM427 million revenue.
All operating subsidiaries returned positive EBITDA with Engineering & Construction (“E&C”) delivering RM62 million EBITDA from RM587.8 million revenue; Operations & Maintenance (“O&M”) delivering RM31 million EBITDA on the back of RM120.9 million revenue; and Drilling delivering RM50 million EBITDA on the back of RM231.8 million revenue.
As part of its holistic restructuring plan (“Reset Plan”), the Group embarked on a series of negotiations with clients for amicable solutions to ensure project delivery.
Its PATAMI in Q1 FY2023 was mainly derived from such ongoing efforts, which materialised through approved commercial settlements and favourable foreign exchange gains following the strengthening of the U.S dollar.
“We are seeing the first green shoots of recovery, following the implementation of our Reset Plan,” said Sapura Energy Group CEO Datuk Mohd Anuar Taib. “We still have significant hurdles to overcome before we can sustain this encouraging momentum.”
Sapura Energy is currently classified as a PN17 company and a regularisation plan, based on the Group’s Reset Plan, is currently being formulated.
“Delivering our Reset Plan becomes more important than ever as it is our route to a stable platform for the Group, enabling us to exit the PN17 status and grow in the near future,” Datuk Mohd Anuar explained.
PROGRESS IN RESET PLAN
Sapura Energy’s Reset Plan, initiated in December 2021, aims to create long-term sustainability by rebuilding the Group’s balance sheet, enhancing its operational and risk management framework, and charting future business direction through portfolio rationalisation.
To date, implementation of the Reset Plan remains on track.
In March, the High Court of Kuala Lumpur allowed Sapura Energy and 22 of its wholly-owned subsidiaries to begin a scheme of arrangement (“SOA”) process with its lenders and trade creditors, as part of the Group’s effort to reduce unsustainable debt and resolve outstanding payments to vendors.
The High Court also granted three-month restraining orders to Sapura Energy and 22 of its wholly-owned subsidiaries, so that these entities may negotiate a compromise with its trade creditors without disruption to operations. Sapura Energy also entered into separate contractual arrangements with its lenders for a standstill on claims.
The Group was recently granted a nine-month extension on the restraining orders to 10 March 2023; and received support from the majority of its lenders to extend the standstill agreement for a period of six months.
The Group is undergoing a proof of debt exercise with its trade creditors; and aims to finalise a proposed SOA as soon as possible. The Group aims to present a fair and equitable proposal agreeable to all stakeholders.
The Group recently received a drawdown of RM300 million from its existing working capital facility, backed by proceeds from the disposal of its pipe-laying and heavy-lift vessel Sapura 3000. It is also working to secure additional sources of funding.
Sale of Sapura 3000, in line with the Group’s portfolio rationalisation, is expected to be completed by end July. The Group’s remaining fleet is capable of delivering its current and future business plan.
Sapura Energy recently disclosed that its Drilling and E&C business segments secured major contract awards in the Eastern and Western Hemispheres with a combined value of about RM2.5 billion, and an additional win of almost RM0.2 billion contributed by its joint venture company. The Group’s order book currently stands at RM8.3 billion. These awards signal a deliberate shift in its bid strategy to focus on areas where it is highly competitive.
Notable new wins for E&C include a subsea umbilicals, risers and flowlines (“SURF”) contract award from Enauta Energia SA for its Atlanta Full Field Development in the Santos Basin, offshore Brazil, won by Sapura Energy Do Brasil and its consortium partner, Sapura Navegação Marítima S.A.; and a transportation and installation contract from Hess Exploration and Production Malaysia B.V for its North Malay Basin development.
Meanwhile, the Group’s Drilling business segment won three long-term contracts for its offshore tender-assist drilling rigs from PTTEP Energy Development Company Limited (“PTTEP”), and obtained another award for a new drilling campaign, offshore Malaysia.
In Q1 FY2023, the Group completed 11 major projects, including offshore transportation and installation in Congo; an engineering, procurement, construction, installation, and commissioning (“EPCIC”) contract in Mexico, and a drilling campaign in Sarawak.
The Group’s Exploration and Production (“E&P”) segment, operated through the strategic partnership SapuraOMV, continue to clock safe man-hours across all operating assets in Malaysia and Australia, with the Jerun project progressing as planned; and its production rate maintained at 30 thousand barrels of oil equivalent per day. Recently, SapuraOMV with its partner PTTEP HKO, a subsidiary of PTTEP, was awarded a production sharing contract (PSC) by PETRONAS for the exploration Block SB412, off the northwest coast of Sabah.
The Group will continue executing project activities during the rest of the year with more than 50 ongoing projects across its business segments. It commenced several major projects in the second quarter of FY2023, including offshore installation and drilling campaigns in Peninsular Malaysia, Trinidad & Tobago, and Gabon, Africa.
The Group is also improving its project profitability through continuous improvements of its project management discipline, underpinned by stronger contract and cost management, to protect margins.
Cautionary note: “Sapura Energy”, “the group” and “the company” are used for convenience where references are made to Sapura Energy Berhad in general. Similarly, words like “we”, “us” and “our” are used to refer to Sapura Energy Berhad in general or to those who work for the company and its subsidiaries, where relevant. This press release may contain forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding our financial position, financial estimates, business strategies, prospects, plans and objectives for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. Such forward-looking statements reflect our current view with respect to future events and are not a guarantee of future performance. Forward-looking statements can be identified by the use of forward-looking terminology such as the words “may”, “will”, “would”, “could”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “aim”, “plan”, “forecast” or similar expressions and include all statements that are not historical facts.