KUALA LUMPUR (Nikkei Markets) — Sapura Energy, a Malaysian oil-and-gas services provider, Wednesday said its fiscal second quarter net profit fell 74% on year, mostly due to a loss at its drilling segment amid challenging industry conditions.
Net profit for the three months ended Jul. 31 totalled 28.93 million ringgit ($6.86 million), sharply lower from 112.27 million ringgit a year ago, the company, which was earlier known as SapuraKencana Petroleum, said in an exchange filing.
Quarterly revenue fell 1.2% to 1.66 billion ringgit from 1.68 billion ringgit a year earlier, mostly because some rigs were off contract. Cessation of the Berantai risk-sharing contract and lower oil output also weighed on the company’s earnings.
“Industry condition continues to be challenging in the current financial year,” the company said. Although oil prices have stabilised, Sapura Energy remains cautious on the industry’s capital spending outlook in the near term.
However, there is an increase in tendering and bidding activities across key geographies in recent months, the company said. To boost competitiveness in replenishing the order book, the company is focused on strengthening its position in current markets, re-basing costs and improving operational efficiency, it added.
“We remain committed to expanding our footprint into new geographies and enhancing our service offerings to suit client needs,” Group Chief Executive and President Shahril Shamsuddin said.
Sapura Energy expects to start gas production from the SK310 B15 block in the third quarter of the current fiscal year. “Alongside the group’s future gas development plans for SK408, these milestones will provide long-term financial visibility for the group,” Shahril added.
“While there may be a slight pickup in earnings in the fourth quarter after Sapura’s new gas field starts production, it’s a small field and I don’t see any other boost at this point,” said Kong Ho Meng, an analyst at UOB Kay Hian Securities.
The company’s drilling revenue for the fiscal second quarter amounted to 278.6 million ringgit, which was 48.2% lower from 537.7 million ringgit a year earlier due to some idle rigs. It reported a pre-tax loss of 85 million ringgit.
Revenue at exploration and production segment more-than-halved on year to 162 million ringgit from 353.3 million ringgit a year earlier.
However, engineering and construction segment recorded revenue of 1.26 billion ringgit, which was 58.3% higher than the year-earlier’s 796.7 million ringgit, the company said.
For the first six months of the fiscal year, the company’s net profit plunged nearly 75% to 56.46 million ringgit from 222.58 million ringgit in the same period last year. Cumulative revenue fell 5.2% to 3.43 billion ringgit from 3.62 billion ringgit over the same six months last year.
Shares of Sapura Energy shed 5.9% to end at 1.61 ringgit apiece on Wednesday, while the benchmark FTSE Bursa Malaysia KLCI closed 0.1% lower.