Malaysia's SapuraKencana Petroleum Incurs Loss of $196M in PAT for FY16

Malaysia's integrated upstream oil and gas services provider SapuraKencana Petroleum Berhad incurred a loss in profit after tax of $196.17 million (MYR 791 million) for the financial year that ended Jan. 31, 2016 (FY 2016), compared to a gain of $355.4 million (MYR 1.433 billion) in the previous year as the low oil price environment continues to weigh on the industry, the company said in its release of annual financial results Friday.

Despite the prolonged industry downturn, SapuraKencana Petroleum posted revenue of $2.53 billion (MYR 10.184 billion) in FY 2016, up 2.4 percent from $2.47 billion (MYR 9.943 billion) in FY 2015, with profit before tax rising 1.1 percent to $349.2 million (MYR 1.408 billion), compared to $345.5 million (MYR 1.393 billion) a year ago. The firm made provisions of $421.6 million (MYR 1.7 billion) for the impairment for property, plant and equipment as well as oil and gas properties.

SapuraKencana Petroleum's services divisions (Drilling and Engineering & Construction) reported operating profits of $287.4 million (MYR 1.159 billion) although the Energy Division posted an operating loss of $360.6 million (MYR 1.454 billion) largely due to the weak oil price environment and the resulting provisions for impairment made.

The company's current orderbook stands at around $5.28 billion (MYR 21.3 billion), supported by new contracts worth $1.12 billion (MYR 4.5 billion).

Major engineering and construction projects completed by SapuraKencana Petroleum in Southeast Asia included the engineering, procurement, construction, installation and commissioning of Gas Balancing Evacuation (EVA EPCIC) project for the Trans-Thailand Malaysia Joint Development Area (JDA), a pipelay project in Nam Con Son and Thai Binh in Vietnam for PetroVietnam and a 118-mile (190 kilometer) Kepodang pipelay project for Indonesia's PT PGAS.

In offshore India, SapuraKencana Petroleum has commenced operations on the EPCIC project for state-owned Oil and Natural Gas Corp. Ltd.'s Mumbai High South Redevelopment Phase III project, while progressing work on the Vasai East installation. Over in Brazil, the firm's Sapura Onix and Sapura Jade have commenced operations, joining two other pipelaying support vessels (PLSVs) in the area, while it completed executed a 3,200 metric ton lift and pipelay contract for Pemex in Mexico.

Turning to its energy division, SapuraKencana Petroleum reported a net production of 4.8 million barrels. The company also received approval from Malaysia's national oil company Petroliam Nasional Berhad (PETRONAS) for the SK 310 B15 Field Development Plan (FDP), with first gas expected by fourth quarter of 2017. Meanwhile, the firm said its drilling division's operational rigs enjoyed an "average uptime of 99 percent."

“The Group will continue to manage the current industry pressures through aggressive implementation of our initiatives to reset costs to match the low oil price environment. This involves strategic initiatives in the optimization of our supply chain and improvements to our operational and organizational efficiency. Our efforts have now been hardwired to ensure long-term competitiveness," Shahril Shamsuddin, president and the Group CEO said in the press release.

"The Group has generated strong operational performance in FY16 across all business segments through our commitment on precision in execution. Looking ahead, we still anticipate pressures on our margins in the near term but remain confident in our ability to deliver fit-for-purpose solutions for our customers."

Shahril added that the company "will navigate this period with an enhanced focus on opportunities in key markets such as in South East Asia, India, the Middle East and Mexico. We will continue to strengthen key capabilities and ensure our cost base is competitive in a $30 oil price environment with the embedded agility to benefit as the industry recovers.”

Earlier on Thursday, SapuraKencana GE Oil & Gas Services Sdn Bhd -- a joint venture between SapuraKencana Services Sdn Bhd and GE Power Systems (M) Sdn Bhd -- clinched a long term contract from PETRONAS Floating LNG1 (L) Ltd. to provide maintenance services for PETRONAS' two newbuild floating LNG (liquefied natural gas) vessels.


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