Monday January 28, 2013
SapuraKencana could garner RM3bil-RM5bil jobs annually
By TEE LIN SAY
PETALING JAYA: Malaysia's largest oilfield service provider SapuraKencana Petroleum Bhd is expected to garner about RM3bil to RM5bil worth of contracts annually, said industry analysts.
Currently, it has a sizeable RM18bil in its order book, with some 35% in Malaysia while Brazil and the Gulf of Mexico its second largest markets contribute about 24%. About 65% of SapuraKencana's jobs are for full engineering, procurement, construction, installation and commissioning works.
Moving forward in Malaysia alone, there were some RM300bil worth of jobs up for grabs, and SapuraKencana was likely to bid for most of the jobs, the analysts said.
The potential jobs include the RM16bil Petronas Carigali-Hess' North Malay gas project in the North Malay basin and Shell's RM5bil deepwater Malikai project, off Sabah, and Petronas Carigali's enhanced oil recovery projects, also worth RM5bil.
Earlier in the week, Upstream, an oil and gas magazine, reported that SapuraKencana and consortium partner Norway's Seadrill were in a neck-and-neck race against Technip-NosSkan to win potentially over US$5bil (RM15.2bil) contracts in Brazil.
The contracts are for the supply of six to seven pipe-lay flexible support vessels (PLSVs) from Brazil's national oil company Petrobras.
Analysts said Petrobras was seeking new-build PLSVs with different tension capacities and had divided the tender into several packages, with charters on offer for five or eight-year periods, also giving players the option to build vessels locally and abroad.
Fuel type and local content thresholds are among the key factors that could affect the outcome of the tender.
AmResearch feels that SapuraKencana stood a good chance, particularly since the Seadrill-SapuraKencana joint venture has already been contracted by Petrobras to provide three PLSVs with charters worth US$1.4bil (RM4.2bil) to work in the latter's pre-salt fields in 2014 and 2015.
AmResearch opines that Seadrill-SapuraKencana appears likely to get at least three of the PLSVs, given that Petrobras may need to diversify contracting risks to more players.
“For the initial six vessels, Petrobras may split three contracts each between Seadrill and SapuraKencana, and will likely pick two vessels from each category in the tender.
“While a seventh PLSV may be awarded to Subsea 7, if Petrobras opts to diversify the risk, then Seadrill-SapuraKencana and Technip-Norskan are seen in the best place to secure the bulk of the fresh charters,” AmResearch said.
Assuming that the joint venture secures the three PLSV job, AmResearch, however, doesn't expect SapuraKencana's forward net gearing to rise significantly above one time, given its net profit of RM1.2bil to RM1.3bilannually.
It pointed out that the group's equity contribution for the new PLSVs may amount to only RM270mil, assuming a 20:80 debt-to-equity financing for the 50:50 joint venture.
AmResearch early this month estimated that the group's net gearing would stand at 1.2 times upon completion of a US$2.9bil (RM8.8bil) acquisition of Seadrill's tender rigs next month.
The gearing could moderate to 90% by end-2014 after a proposed placement of 969 million new SapuraKencana shares at RM3 each. It noted that while the joint venture's capital expenditure pipeline of US$1.4bil remains sizeable, US$500mil from the 50% owned PLSV will be funded largely off-balance sheet.
Other recent developments for SapuraKencana include its frontrunner position to clinch the Samarang central processing platform (CPP) project from Petroliam Nasional Bhd.
The turnkey CPP project would involve the construction and installation of a 10,000-deck CPP. It will likely come equipped with gas compression and water injection modules, with an expected completion date of 2015.
Analysts have given estimates that the contract would cost between RM1.2bil and RM2.7bil.
In November, SapuraKencana announced it was buying the rig business, including the full tender rig organisation from Seadrill for an enterprise value of US$2.9bil (RM8.9bil).
The two firms have entered into a non-binding memorandum of understanding to combine and integrate both companies' tender rig businesses.
Upon completion of the proposed transaction, the enlarged tender rig business under SapuraKencana will comprise 16 wholly-owned tender rigs in operation.
It will also include an additional five units that are currently under construction, three of which will be acquired through the proposed transaction and are expected to be delivered this year.
SapuraKencana will also be offered the right to be the manager for three tender rigs which are not part of the proposed transaction.