Sapura Energy disposes of entire 50% stake in SapuraOMV for US$705m to TotalEnergies

KUALA LUMPUR (April 22): Sapura Energy Bhd is selling its remaining 50% stake in SapuraOMV Upstream Sdn Bhd, an exploration and production (E&P) unit it bought in 2014, to TotalEnergies Holdings SAS for US$705.3 million (RM3.37 billion) — comprising US$530.3 million cash and US$175 million relief on debt obligations.

Sapura Energy bought the E&P unit for US$898 million back in 2014 from Newfield Exploration Co, before selling half its stake to OMV AG in 2018 for up to US$975 million.

The price tag of its remaining 50% stake is US$198 million less than the US$903 million that TotalEnergies is paying to get the other 50% stake from OMV. With the sale, the French oil major will fully own SapuraOMV. It was previously reported that Sapura Energy was looking for US$1.2 billion for the stake.

In a statement, Sapura Energy said the US$175 million obligation is in respect of a financing facility extended by a unit of OMV AG to SapuraOMV, “in connection with the share subscription and restructuring exercise” among Sapura Energy, OMV, and SapuraOMV on Jan 31, 2019.

The proposed divestment will result in a net gain on disposal of about RM793 million upon completion, Sapura Energy added.

It is expecting the sale to be concluded “no later than” the second half of 2025, saying the two parties are “committed to expediting” the transaction’s completion by end-2024.

The price secured by the company is “fair and equitable”, group chief executive officer Datuk Mohd Anuar Taib said.

“This portfolio rationalisation marks our strategic shift away from the E&P business, as we enhance our core capabilities to deliver innovative solutions to the dynamic energy industry,” he said.

With the E&P exit, Sapura Energy still has an order book of RM6.6 billion from its other segments, namely engineering and construction, drilling, and operations and maintenance, the company added.

Sapura Energy is exiting the E&P business at a time when oil prices face mixed signals, including geopolitical tensions in the Middle East that put supply at risk, while the demand side is clouded by concerns of a slowing global economy.

The upstream services company’s E&P ambition was driven by its former CEO and president Tan Sri Shahril Shamsuddin, which culminated in the acquisition of the upstream business in 2014.

SapuraOMV’s assets include operating interests in Blocks SK408 (40%) and SK310 (30%) offshore Sarawak, both of which produced an average of 30,000 barrels of oil equivalent per day in the financial year ended Jan 31, 2023 (FY2023) based on annual report figures.

Within SK408, the Jerun gas field is on track for start-up in the second half of 2024, Sapura Energy said in its statement.

“SapuraOMV also holds exploration licences across strategic regions, including Malaysia, Australia, New Zealand, and Mexico,” it added.

The cash portion of US$530.3 million plus debt relief of US$175 million would provide temporary relief for Sapura Energy, which is in the midst of developing a regularisation plan to address its Practice Note 17 status.

As at end-January, Sapura Energy had cash of RM1.45 billion on current borrowings of RM10.98 billion, and current trade and payables of RM5.5 billion.

Accumulated loss amounted to RM17.31 billion, which resulted in a shareholders’ deficit of RM4.19 billion, up from RM2.9 billion a year before.

The group is in the midst of coming up with a regularisation plan to address its balance sheet position. It has been given until June 10 by the courts to restrain any legal action by creditors, including local vendors and those for its RM10.3 billion multi-currency financing facilities.

At least 75% of these creditors have provided requisite approval-in-principle for its proposed debt restructuring scheme, back in December last year.

Shareholders of Sapura Energy include Permodalan Nasional Bhd via Amanah Saham Nasional Bhd (40.73%). Brothers Capital Sdn Bhd, linked to Shahril and his brother Datuk Shahriman Shamsuddin, owns a 12.94% indirect stake in the listed entity. Shahril also owns a 1.09% direct stake in Sapura Energy.

Aside from SapuraOMV, Sapura Energy’s other assets include fabrication yards in Lumut, Perak (273 acres or 110.48 hectares), Labuan (88 acres), and Teluk Kalong, Terengganu (20 acres).

It has five derrick lay vessels, six pipelay vessels, one subsea construction vessel, two anchor handling tug supply vessels, and other offshore support vessels. Sapura Energy also has five semi-tender rigs and six tender assist rigs, its official website showed.

Sapura Energy, which still has a vast presence across the local upstream oil and gas ecosystem, has been trading at between four sen and six sen over the last 52 weeks.

The group remained in the red in FY2024 as all segments bled, with a full-year net loss of RM728.4 million on revenue of RM1.1 billion. During the year, financing costs totalled RM805.51 million, against net operating cash flow of RM311.29 million.