By Khairul Khalid
SapuraKencana Petroleum has posted profit after tax of RM129 million for the third quarter of financial year 2016 (3Q16), a drop of approximately 63% year-on-year.
Although the company’s 3Q16 revenue increased 20% year-on-year to RM2.89 billion, its earnings were hit by a RM317 million provision for impairment on property, plant and equipment and oil and gas properties, as well as RM28 million provision for impairment on investment.
These non-cash impairment write-downs are mainly attributed to the continuing tumble of crude oil prices in the last 18 months due to severe oversupply. This week Brent crude oil, a widely used global price benchmark, hit an 11-year low to US$36 per barrel.
Year-to-date 3Q16, SapuraKencana’s provisions for impairment on property, plant and equipment and oil and gas properties, provision for impairment on investment and changes in provisions have totalled RM805 million,
Shahril Shamsuddin
“The industry continues to face pressures over the medium term due to weak oil prices and the resultant reduction in capital spending. Despite this, our services business continues to secure and deliver work in key markets such as Brazil, India, West Africa and Malaysia,” said Shahril Shamsuddin, president and group chief executive officer (CEO) of SapuraKencana Petroleum in a media statement today.
According to the company, its services divisions (drilling and engineering & construction) reported operating profits of RM1.3 billion year-to-date 3Q16.
Nevertheless, SapuraKencana’s energy division reported an operating loss of RM550 million in the same period due to the weak oil price and resulting provisions for impairment charges.
“In our energy segment, we are encouraged by the approval for our first gas field development, the B15 field in block SK 310 offshore Sarawak, Malaysia. First gas is targeted in the fourth quarter of 2017.
This development initiates the commercialisation of our gas discoveries and will provide additional long-term visibility on the group’s oil and gas production,” said Shahril.
The SapuraKencana CEO also reiterated that the company had recently signed a six-year multi-currency Islamic facility that enables the company to match borrowings to its long-term business profile.
SapuraKencana currently has an order book of RM21 billion with a cash and bank balance of RM2.3 billion.
At 1.45pm today, SapuraKencana shares were trading at RM1.70, up 1 sen.
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