May 24, 2017 16:00 pm MYT
Jose Barrock / The Edge Malaysia
This article first appeared in The Edge Malaysia Weekly, on May 15, 2017 – May 21, 2017.
A handful of oil and gas companies — Dayang Enterprise Holdings Bhd, Petra Energy Bhd, Sapura Energy Bhd’s wholly owned SapuraKencana Pinewell Sdn Bhd, Carimin Petroleum Bhd and a joint venture between Deleum Bhd and Icon Offshore Bhd — could be shortlisted for portions of the RM6 billion maintenance, construction and modification (MCM) contracts expected to be dished out by Petroliam Nasional Bhd (Petronas) in July or August, industry sources say.
Another company still in the running from the initial 20 or so bidders is privately held Pioneer Engineering Sdn Bhd, according to some of the sources.
Petronas is expected to split the MCM contracts into six packages with a five-year duration.
News reports say the largest contract is worth RM1.5 billion for the Sarawak portion, but details have been scarce.
“From what we know, the value of the contracts should be about RM1 billion a company … it should be good for all of us as times are tough,” says an executive from one of the shortlisted companies.
It has been speculated that Dayang is the incumbent for the Sarawak portion and stands a good chance of bagging the job.
The shortlisted companies
Dayang has an order book of about RM3 billion, which should keep it busy until next year, and a strong tender book of about RM4 billion.
For its financial year ended December 2016, Dayang posted a net profit of RM54.93 million from RM694.65 million in revenue. Dayang’s earnings are stabilising, with its 4Q net profits at RM47.09 million.
It had cash and cash equivalents of RM292.42 million and deposits and prepayments of RM39.40 million. Its long and short-term debt commitments stood at RM1.34 billion and RM296. 93 million respectively.
Last Thursday, Dayang closed at RM1.23, giving it a market capitalisation of RM1.19 billion.
Sapura Energy, which has an order book of nearly RM17 billion, is among the largest oil and gas service providers in the world. At its closing price of RM1.92 last Thursday, it had a market capitalisation of RM11.50 billion.
For its financial year ended Jan 31, 2017, Sapura Energy posted a net profit of RM208.32 million from RM7.65 billion in revenue. It had cash and cash equivalents of RM3.52 billion while its long-term debt commitment was pegged at RM15.13 billion and short-term borrowings at RM3.51 billion.
Petra’s 30% stake in the Kapal Banang Meranti Small Field Risk Service Contract has transformed the company into an oil production outfit. Nevertheless, it still has oil and gas assets that are ideal for MCM-type jobs.
For its financial year ended December 2016, the company suffered a net loss of RM117.28 million from RM333.24 million in revenue. However, Petra made huge impairments — to the tune of RM77.38 million — during the financial year.
The company had cash and bank balances of RM238.64 million while its short-term borrowings were at RM150.16 million and long-term debt commitments at RM87.43 million. It is also worth noting that Petra had retained earnings of RM124.93 million.
Carimin was listed at the end of 2014 at RM1.10 a share but closed at 30.5 sen last Thursday, giving it a market capitalisation of RM71.33 million.
Much of this decline is a result of the tumbling oil and gas prices. Last Thursday, West Texas Intermediate was trading at about US$48 per barrel, in contrast to US$110 in September 2013 and US$145 in early July 2008, when oil and gas counters were in vogue.
For its financial year ended December 2016, Carimin suffered a net loss of RM942,000 from RM64.17 million in revenue.
However, it had RM52.36 million in fixed deposits with licensed banks, short-term investments of RM21.22 million and cash and bank balances of RM16.11 million.
Its long-term debt commitments were RM72.72 million while short-term borrowings stood at RM16.26 million.
Many in the industry were surprised by the joint venture between Deleum and Icon Offshore. Deleum has its mainstay in the provision of specialised products and services to the oil and gas industry, particularly in the exploration and production segments, while Icon has a huge marine spread asset base.
For its financial year ended December 2016, Deleum registered a net profit of RM26.51 million from RM608.65 million in revenue.
Icon, meanwhile, suffered a net loss of RM152.75 million on the back of RM226.91 million in revenue.
Pioneer Engineering is a private company controlled by Mohd Rahimi Abdul Rahman (51%) and Fazli Hazami Abdul Rahman (49%). The directors are Fazli and Salmiah Abdul Rahman.
According to Companies Commission of Malaysia, for its financial year ended December 2015, it posted an after tax profit of RM1.14 million from RM101.21 million in revenue.
It had RM68.24 million in current assets, RM25.39 million in non-current assets, current liabilities of RM54.36 million and non-current liabilities of RM8.07 million. It had RM21.2 million in reserves.