SapKen signs gas sales agreement with Petronas

Tuesday, 28 June 2016

PETALING JAYA: SapuraKencana Petroleum Bhd (SapKen) has signed the SK310 upstream gas sales agreement in relation to the production of gas from the B15 gas field.

SapKen said its wholly owned subsidiary, SapuraKencana Energy Sarawak Inc (SKE), had signed an agreement on June 23, 2016, between Petroliam Nasional Bhd (Petronas) as gas buyer and the contractors of the SK310 production-sharing contract as joint sellers.

SKE is the operator of the Block SK310 production-sharing contract which was awarded by Petronas on June 17, 2008.

SKE has participating interest of 30% while Petronas Carigali Sdn Bhd has 40%, and Diamond Energy Sarawak Sdn Bhd, a subsidiary of Mitsubishi Corp, 30%.

The B15 gas field, which was discovered in December 2010, is located within the SK310 production-sharing contract area, offshore east Malaysia.

The development will comprise a central-processing platform with a 35-km gas evacuation pipeline to be tied into the existing infrastructure.

The B15 gas field will deliver gas to the Malaysia Liquefied Natural Gas (MLNG) complex in Bintulu, Sarawak, with the first delivery targeted in the fourth quarter of 2017.

“I would like to thank Petronas and the SK310 joint-venture partners for their efforts in getting the project to realisation.

“The SK310 upstream gas sales agreement marks SKE’s first participation in a gas sales agreement for east Malaysia,” SapKen president and group chief executive officer Tan Sri Shahril Shamsuddin said in a statement.

SapKen is expected to release its first-quarter ended April 30, 2016 results on Thursday and some analysts said it could be a surprise, as most analysts are bearish on the stock due to the poor sentiment on the sector.

“The company’s numbers will be lower, but considering that it has already provided a substantial amount last year, the numbers could be decent,” said an analyst.

However, there are many who are bearish on the stock.

For instance, DBS Vickers Securities in a recent research report said that it was cutting the forecast earnings of SapKen by between 42% and 80% for the next three financial years until 2019.

The research house has lowered its target price on SapKen to RM1.20 from RM2.10 previously. It explained that the management’s bearish outlook had prompted it to make the drastic cuts in earnings and target price.

DBS said the worst-case scenario would see SapKen’s revenue falling by 35% to RM6.5bil in financial year 2017 (FY17), assuming no new contracts secured as a result of the persistent delays in contract awards.

In addition, it said SapKen’s high overheads, mainly depreciation and finance costs, which amounted to RM1.637bil according to FY16 numbers, would persist despite its lower revenue.

It said that the group’s engineering and construction segment was affected as a result of pending and delayed tenders, while the drilling segment would remain challenging due to ongoing capital expenditure cuts by oil majors. “The recovery of oil prices of late has shown no notable impact on accelerating contract flows,” DBS said.

 

http://www.thestar.com.my/business/business-news/2016/06/28/sapken-signs-gas-sales-agreement-with-petronas/

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About artidj

I started working as a field engineer in Oil & Gas industry back in 1996. I do this news clipping of the industry and the geography I am interested in, mainly for my own information. I'm glad you find it useful.
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