AGGRESSIVE POSITIONING
Company eyes slice of Petronas’ RM6b maintenance, construction jobs
SAPURA Energy Bhd will try to secure more oil and gas jobs from next year onwards now that it has acquired full ownership of heavy-lift and pipelay vessel Sapura 3000.
SAPURA Energy Bhd is expected to be more aggressive in bidding for new jobs from next year after getting full ownership of the heavy-lift and pipelay vessel Sapura 3000, said analysts.
The oil and gas-related company’s bid prospects currently stand at US$8.1 billion (RM34.2 billion), with an order book of RM15.1 billion.
The new jobs will likely include the anticipated RM6 billion worth of maintenance, construction and modification contracts to be offered in phases soon by Petroliam Nasional Bhd.
On Wednesday, Subsea 7 SA and Sapura Energy agreed to end their Asia Pacific-focused SapuraAcergy joint venture (JV), with the JV’s Sapura 3000 sold to a subsidiary of Sapura Energy.
“Having full ownership of Sapura 3000 will further enhance the group’s competitive positioning in the engineering and construction segment.
“Sapura 3000 has established a strong track record in executing heavy-lift, pipelay and decommissioning work for shallow and deepwater projects globally, including projects in Mexico, Japan, China, Australia and Southeast Asia,” the company told Bursa Malaysia.
Sapura 3000 also successfully executed Malaysia’s first two deepwater development projects for the Kikeh and GumusutKakap fields.
The terminated JV surprised some analysts and observers, as it had been making profits in the last two years despite the oil price downturn.
Kenanga Research said Sapura Energy’s net income from SapuraAcergy was RM27 million a year in financial years 2016 to 2017, and it recorded RM8 million in earnings in the first half the 2018 financial year.
“We are rather ‘neutral’ on the full ownership of the vessel, given the sale value is not disclosed, but might be acquired at a discount to its book value (estimated at US$120 million) despite its strong track records in executing heavy-lift, pipelay and decommissioning work for shallow and deepwater development projects globally.
“We maintain our earnings estimates at this juncture, pending more clarity of the transaction upon the third quarter of 2018 financial year results announcement,” it said in a research note.
Kenanga Research said while some small one-off losses was expected on the termination of the JV, full ownership of Sapura 3000 would contribute an additional RM10 million, or seven per cent of the 2019 estimated profit.
“This is assuming 30 per cent utilisation while asset impairment risk could arise if slow contract awards dragged vessel utilisation,” said the research firm.
Kenanga Research reiterated its “market perform” rating call on the counter, with unchanged target price of RM1.55 pegged to the estimated 2019 financial year with price-to-book value of 0.7 times.
Another analyst said full control of the vessel would mean more profit to be recognised for Sapura Energy. However, if there were losses, then Sapura Energy would recognise more losses.
“Should there be impairments on the asset, then Sapura Energy will also be hit more,” said the analyst.
Sapura Energy, in its recent quarterly report, said it had seen an increase in tendering and bidding activities across key geographies in recent months.
It said in order to enhance its competitiveness in replenishing the order book, the group was focused on strengthening its position in existing markets and expanding into new markets, rebasing costs and improving operational efficiency.