WHEN SapuraKencana Petroleum Bhd (now known as Sapura Energy Bhd) was listed on the Main Market of Bursa Malaysia in May 2012, it marked the creation of the country’s largest oil and gas (O&G) service providers at the time as it was a RM11.85 bil merger exercise between SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd.
The company was soaring to the point that its own vice-chairman Mokhzani Mahathir had to buy back the 190 million shares in the company that he previously sold in 2015 for RM4.50 each, as reported in a Jan 17-23, 2015 issue of FocusM.
The divestment gave Mokhzani a gain of RM438 mil from proceeds of RM818 mil, claiming that the decision was ‘lucky’.
“I can’t say it was a good decision, it’s more a lucky one. My divestment of the shares in SapuraKencana was more an investment decision made at that time than a view of what the future holds,” he said in the article.
“If I could have predicted the future, I would have sold slightly later and many more shares,” he added.
With the selling price at RM2.40 at the time, Mokhzani became the third-largest shareholder of the company with an indirect stake of 619.5 milllion shares (10.38%) after the Employees Provident Fund Board with 13.48% and SapuraKencana’s president and CEO Shahril Shamsuddin with 16.81%.
However, deepwater drilling contractor Seadrill Ltd exited the company in 2016 by selling off its RM815 mil worth of shares, as reported by The Star. And that happened just before SapuraKencana ended its Berantai risk service contract (RSC) from Petroliam Nasional Bhd (Petronas) in September 2016, which was intended for crude oil production form the Berantai field just offshore of Peninsular Malaysia.
Not long after that, the O&G company secured new contracts in India and Brunei, apart from Malaysia, with a combined value of US$215 mil (RM893.6 mil), as reported by Offshore in Oct 2016.
In March the following year, the company was awarded several other new contracts, with a total valuation of US$97.4 mil (RM433.6 mil), which were all awarded by Petronas.
The new contracts comprise of Pan Malaysia Integrated Offshore Transportation and Installation (T&I) work and the engineering, procurement, construction and commissioning (EPCC) job for the Sepat mobile offshore production unit (stabilisation and repair works).
It also includes those of Polycold Compact Cooler for the air cooler module and the petroleum clean-up participation programme for Dana and D30 facilities decommissioning project, reported The Edge.
“While relatively small compared with its previous win (RM1.5 bil) announcement in January 2017, it is still positive news to the company and reduces our concern about the company’s order book replenishment risk,” the article noted.
But then it started going downhill when Mokhzani exited the company by selling off 605 million of his shares (10.1% stake), affecting investor sentiment towards the O&G group.
Despite that, analysts believe that the move will be mitigated in the short term, according to The Edge.
“Without Mokhzani’s disposal, fundamentally, the share price should be higher,” AmInvesment analyst Alex Goh said in the article dated Nov 21, 2017.
The day the news broke, Sapura Energy was among the top losers and the most traded counters. Its share price fell 17 sen or 10.5% to its intra-day low of RM1.45 on Nov 2 — its biggest one-day loss since August 2015 — but later recovered to RM1.49, down 8.02%, with 79.85 million shares traded, The Edge pointed out.
From a separate The Edge article, it was reported that the company suffered a net loss of RM2.5 bil on revenue of RM5.89 bil in its financial year ended Jan 31, 2018 (FY18), due to an impairment loss of RM2.1 bil in its drilling rig business.
This caused the company’s share price to plunge 13.8% to 47 sen as of Apr 4, 2018.
“It is worth noting that Sapura Energy had a similar impairment loss in FY2016, when it was known as SapuraKencana Petroleum Bhd, due to a low oil price environment,” the article pointed out.
In September of that year, it was also reported by The Edge that Sapura Energy was disposing a 50% stake in its unit Sapura Upstream Sdn Bhd to OMV Akteingesellschaft (OMV AG), opting for a stake sale to pare down its debts.
According to a Bursa Malaysia filing, the transaction was based on an enterprise value of US$1.6 bil (RM6.65 bil).
Fast forward to 2020, the oil price shock that happened earlier this year caused the company to ‘aggressively bid for jobs globally in a depressed market’, as reported by The Edge.
Despite still being one of the largest integrated O&G services groups in the world, the company still has RM18 bil worth of assets that requires high financing costs in the offshore construction, offshore drilling and exploration production spaces.
“Still, Shahril is convinced that Sapura Energy is not a company in trouble. It hasn’t been easy convincing the same of analysts and investors, who Shahril says have misunderstood the company’s real potential due to its inability to turn around in a prolonged downturn,” the article said.
But all of that will soon be someone else’s problem as Shahril plans to retire from his post as president and CEO of Sapura Energy Bhd, appointing Mohd Anuar Taib as its chief operating officer and CEO, effective March 2021.
As of 4.06pm today, Sapura Energy Bhd’s share price dropped 4.76% to 10 sen, with a market capitalisation of RM1.53bil. – Oct 8, 2020
