KUALA LUMPUR: Sapura Energy Bhd expects an improved operating environment in the year ahead amid continued global economic recovery and high crude oil prices due to geopolitical tensions in Eastern Europe that are driving energy importing countries to look for new sources of supply.
The oil and gas outfit said these factors and the sharply higher oil prices, which have so far besieged the financial year ending Jan 31, 2023 (FY2023), would underpin renewed investment in the oil and gas sector, driving demand for its services.
Capitalising on these opportunities will require Sapura Energy to retain laser focus on the effective financial and operational restructuring of the company, it said in its annual report 2022
"As a key part of our restructuring, Sapura Energy is actively working to secure new funding sources to ensure that we have the necessary capital to execute our turnaround plan, including through divesting non-core assets.
"Alongside this, we will continue to engage with our lenders on the best way forward to address our debt burden," chairman Datuk Mohammad Azlan Abdullah and group chief executive officer Datuk Mohd Anuar Taib said in a joint review statement of the annual report.
Sapura Energy is optimistic about the prospects of reaching an agreement that recognised the claims of its lenders while ensuring the continued financial viability of the company and it would also continue to negotiate with its trade creditors under the framework of scheme of arrangement (SOA) to reach a mutually acceptable agreement on outstanding payments.
PN17 Status
On Tuesday, Sapura Energy announced that it has triggered the prescribed criteria pursuant to the Listing Requirements under Practice Note 17 (PN17), taking steps to regularise its business through a Reset Plan, launched in the financial year ended Jan 31, 2022 (FY2022).
Sapura Energy's board of directors has created a Board Restructuring Task Force in December 2021 to strengthen its management and governance functions and took a major step towards restructuring its debts in a fair and orderly manner through negotiations with its creditors after obtaining court orders to begin the SOA process in March 2022.
"It is important to stress that despite the current financial difficulties, Sapura Energy maintained competitiveness in the global energy services market; and continued to win contracts in Malaysia and internationally," said Mohammad Azlan and Mohd Anuar.
Building on this capability, Sapura Energy is confident its Reset Plan is on track to deliver improved results in FY2023, placing the group on the right path towards financial and operational stability.
Impact of COVID-19
Sapura Energy said the pandemic continued to have a major impact on its financial performance in FY2022.
It added that almost all of the RM2.2 billion operating losses resulted from legacy contracts that the group signed before the previous financial year (FY2021), which did not include COVID-19 provisions.
The group had incurred about RM570 million in direct costs from COVID-19 since the start of the pandemic and these direct costs include vessel standby expenses, as well as testing and quarantine costs for crew and employees, and the cost of deploying its own vaccination programme.
Apart from the direct costs incurred, the pandemic also resulted in additional expenses due to procurement delays and changes to project schedules and these consequential costs, which could be much higher than direct costs, severely eroded the profitability of certain projects.
"As yet, Sapura Energy has recovered only a small portion of these additional costs and is in the process of negotiating with clients to reimburse these costs," said Mohammad Azlan and Mohd Anuar.
The group noted that Sapura Energy's exposure to pre-pandemic contracts is expected to be reduced in FY2023 and such legacy contracts account for about half of its revenue composition in the first quarter of FY2023.
"We expect to reduce this portion to about 27 per cent by end-FY2023," said Mohammad Azlan and Mohd Anuar, adding that the group's discipline in project implementation and execution would ensure that the contracts it undertook were executed safely and efficiently.
The group's Enterprise Risk Management Framework, with appropriate risk appetites across its value chain, will be a key enabler to sustained performance.
"Sapura Energy will also be divesting assets that are not core to our business plan to sharpen our operational focus and free up capital. The group is also seeking sources of new funds to finance its business plan as it restructures its business and streamlines its operations," said Mohammad Azlan and Mohd Anuar.
-- BERNAMA
Bernama
Wed Jun 01 2022
Capitalising on these opportunities will require Sapura Energy to retain laser focus on the effective financial and operational restructuring of the company, it said in its annual report 2022 - sapuraenergy.com
US military plane deporting Indian immigrants lands in India
The Trump administration has increasingly turned to the military to help carry out its immigration agenda.
Trump's Gaza plan for 'Riviera of the Middle East' triggers international condemnation
Countries from Russia, China, Spain, Ireland and the UK say they continue to support the two-state solution.
US Postal Service suspends inbound parcels from China, Hong Kong
Trump's crackdown on de minimis would make the products sold by the likes of Shein and Temu more expensive.
US plan to take over Gaza: Malaysia's stance on Palestine unchanged - PM
Datuk Seri Anwar Ibrahim says Malaysia's stance remains the same as that of other Islamic countries.
US freezes funding for security mission tackling Haiti's gangs
More than $13 million in US funding for an international security force helping fight armed gangs in Haiti has been frozen, the UN says.
Over 40,000 civil servants at high risk of mental health issues - Zaliha
A total of 44,901 civil servants were screened under Public Service Psychological Health Digital Profiling System, says Dr Zaliha Mustafa.
India's Modi takes 'holy dips' at Maha Kumbh, week after stampede killed dozens
Security personnel stood in the water nearby while thousands of people crowded the banks to watch the prime minister perform the rituals.
Philippine Congress endorses impeachment complaint against vice president
Vice President Sara Duterte would be the Philippines' second most senior official to face removal from office.
What is a sovereign wealth fund?
Sovereign wealth funds are investment vehicles owned by countries.
[COLUMNIST] Rising above Trump tariffs: How a resilient global economy outlasts US protectionism
The current alarm over Trumps tariff threats overlooks a key point: global markets are resilient and adaptable.
Khazanah reports RM5.1 billion operating profit for 2024
Khazanah records RM103.6 billion NAV in 2024, driven by strong domestic investments and strategic growth.
Washington, DC officials identify 66 of 67 victims of midair collision
Work continues by the US Army Corps of Engineers to remove the airplane wreckage from the Potomac River.
Government to further strengthen ASEAN's readiness in finalising DEFA
Malaysia is focusing on two main approaches to facilitate the DEFA negotiation, says Liew Chin Tong.
Trade war will not hinder Malaysia’s GDP growth for 2025 - Rafizi
The finance ministry has projected Malaysia's GDP to grow between 4.5 and 5.5 per cent in 2025.
Trump administration considers adding Shein, Temu to 'forced labor' list, Semafor reports
The move comes after China imposes targeted tariffs on US imports and warnings of possible sanctions against firms like Google.
Thailand to cut power to Myanmar border areas linked to scam centres
Evidence shows transnational crime syndicates in Myanmar's Tachileik, Myawaddy, Payathonzu, that are possible power cut targets.
Trump reimposes 'maximum pressure' on Iran, aims to drive oil exports to zero
Trump signs the presidential memorandum reimposing Washington's tough policy on Iran that was practiced throughout his first term.
FACTBOX: Trump proposes US takeover of Gaza
Here are some remarks that US President Donald Trump made and questions that he answered during a press conference.
Singapore passes law against foreign interference in race-based organisations
Under the Racial Harmony Bill, race-based groups must disclose foreign and anonymous donations, affiliations, and leadership.
Malaysia, Uzbekistan agree to elevate ties to strategic partnership
Malaysia and Uzbekistan noted active cooperation on key issues within international bodies, especially the UN and OIC.