Genting: No plan to divest O&G asset yet

KUALA LUMPUR: Genting Bhd will wait for its Kasuri block in Indonesia to make first production in 2019 before deciding on whether to sell the oil and gas asset.
“We’ll wait for production before we pursue anything, it’s not worth to dispose of it now. We’ve to prove the value, that’s our long-term policy,” Genting chairman and CEO Tan Sri Lim Kok Thay said at the group’s AGM here yesterday.
He was responding to a question on whether Genting should look at monetising its non-core, energy assets and focus back to its core businesses of leisure, gaming and hospitality.
Genting’s first-quarter net profit ended March 31, 2016 plunged 79% to RM130.83 million against RM620 million in the previous corresponding period.
Lim noted that the group’s strategy is to develop businesses that are sustainable rather than being short term and speculative.
“The board always considers on how to maximise the return from the investments made to declare higher and better dividend to the shareholders,” he added.
Lim pointed out that the group is preparing to submit a Plan of Development (PoD) for the Kasuri production sharing contract to get approval from the Indonesian government and oil and gas regulator.
“Assuming no significant delays in the approval process, revenues from the first production of gas are estimated to start from 2019,” he said.
To date, Genting’s exploration cost of US$1.20 per barrel of oil equivalent is lower compared with most of the oil majors.
“The fall in oil prices also offers us the opportunity to develop the field at a much lower capital expenditure in the PoD since the costs of services, construction and manufacturing in the oil and gas industry have also fallen,” he said.
Commenting on the foreign labour levy increase, Lim acknowledged that it will lead to an increase in the cost of production as the labour cost makes up a significant portion of the cost structure for Genting Plantations Bhd.
“Genting Plantations will endeavour to mitigate the impact of such increases through yield management and cost management initiatives,” he said.
For the property business, he said the estimated total gross development value for planned new launches in 2016 is RM130 million. The take-up rate for properties launched in 2015 was in the range of 22% to 80%, depending on property type.
Meanwhile, on Genting’s 20.6%-owned TauRx’s listing plan in the US, Lim said nothing has been decided by the TauRx board, depending on the outcome of the clinical trials.
TauRx is a clinical stage pharmaceutical firm developing new treatments for a range of neurodegenerative diseases, in particular Alzheimer’s Disease. As TauRx is at clinical development phase, it’s still in a loss-making position with a loss before tax of US$13.23 million (RM54.8 million). Genting’s total investment cost in TauRx is RM480.3 million.