SapuraKencana allocates RM1.5b capex

KUALA LUMPUR: SapuraKencana Petroleum Bhd, one of the world's largest integrated oil and gas services providers, has allocated US$500 million (RM1.5 billion) of annual capital expenditure (capex) over the next three years, mainly to strengthen its drilling, energy services and fabrication, and hook up and commissioning (HUC) segment.
"We are investing in our drilling business and we will continue to build more rigs. Meanwhile, some funds will be spent on the development capex of the energy business," its president and group CEO Tan Sri Shahril Shamsuddin (pix) told a press conference after the FY2014 financial results briefing yesterday.
Shahril said part of its capex will go to the development of gas fields under Newfield Malaysia Holding Inc, which is expected to begin production by 2017, while another portion will go into modernising and building up the capability of its fabrication business.
SapuraKencana will also continue to look out for greenfield projects under Newfield Malaysia.
Shahril said that the group's offshore construction and subsea services segment is fully-invested.
On another note, SapuraKencana, which concluded the refinancing club deal for RM16.5 billion from 13 banks recently, has no plan to raise fresh funds from the capital market or spin off its assets, such as Newfield Malaysia, at the moment.
"No, there is no need for fresh capital because we are fully-funded," said Shahril, adding that the group intends to pare down its debts to equity ratio to pre-merger level of 0.8 times within the next three years, down from 1.2 times currently.
"The spin-off depends on many factors. Does it add value to the group independently? At the moment, we want to focus on the execution. As and when there is a strategic reason, we will explore it. But right now, there is no plan," he continued.
SapuraKencana, the world's largest tender rig operator, currently has an order book of RM25.4 billion.
Shahril said the order book is expected to remain at the same level going forward, given SapuraKencana's burn rate of about three and a half years to four years.
"It takes about 15 months to two years for us to win a contract and replenish our order book," he said.
To recap, SapuraKencana's refinancing deal was made to replace and streamline facilities inherited following the merger of SapuraCrest Petroleum and Kencana Petroleum in 2012.
It was also undertaken to finance the group's two most recent acquisitions of the tender-rig business from Norway's Seadrill Ltd last year, which has since been renamed SapuraKencana Drilling, as well as the purchase of the entire stake in Newfield Malaysia.
SapuraKencana turned a net profit of RM337.23 million in the fourth quarter of financial year ended Jan 31, 2014, against RM123.89 million a year ago, mainly driven by strong contributions from its newly-acquired tender rig business.
The US$2.8 billion rig integration was completed on April 30, 2013.