Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on September 14, 2017

KUALA LUMPUR: Enra Group Bhd is eyeing over RM1 billion worth of upstream jobs in marginal oil fields in Thailand, Myanmar, Australia and Malaysia, where it hopes to secure at least two jobs in 24 months.

Its president and chief executive officer Datuk Mazlin Junid said via three joint ventures (JVs) established with foreign companies, it aims to serve a niche market by providing low-cost solutions for fields with remaining exploration age of two years.

Mazlin said the technology is able to save its clients 50% to 70% the cost of setting up oil rigs on depleting oil fields.

Speaking to reporters after Enra’s annual general meeting yesterday, he said oil fields in the South China Sea mostly involve marginal, brownfield or deepwater oil explorations.

“These are all expensive fields to run and the yield is much lower than normal big fields [but] here is where we come in to come up with solutions that meet the new costing benchmarks.

“And we make a net profit margin of 10% to 12% in the upstream segment while the downstream segment sees a net margin of 15% to 20%,” he added.

Formerly known as Perduren (M) Bhd, a property development and investment company, Enra took over the company in 2015 and diversified into upstream and downstream oil and gas (O&G) businesses.

Group deputy executive chairman Tan Sri Kamaluddin Abdullah said Enra is able to sustain at this level of business as it leverages on the expertise of its partners that have a clean and healthy balance sheet.

He said unlike its peers, Enra chose to form alliances with strong technical partners to serve a niche area of the market.

Enra, via its 60%-owned unit Enra SPM Sdn Bhd, bagged a US$48 million (RM201.12 million) contract for the lease of a single point mooring system and storage tanker to Petroliam Nasional Bhd’s (Petronas) subsidiary PC Myanmar (Hong Kong) Ltd (PCML), through an open tender process.

The facilities will provide condensate storing and offloading services for the Yetagun offshore gas field operated by PCML in the Andaman Sea, off the coast of Myanmar.

Mazlin said the Myanmar project forms its order book of RM200 million that would last for four years.

“The technology has shown we can do it at half the cost than traditionally done. In fact, we received enquiries from around the world to provide that solution. We are now entertaining similar queries in Australia, Thailand and Myanmar again.

“We have two bids that are going out, one with Petronas and another with Murphy Oil Corp for this niche solution. We hope something will materialise soon,” he added.

Additionally, Enra Icon Sdn Bhd, a JV between Enra and Australian company ICON Engineering Pty Ltd, has secured a technology licence from Petronas.

“It is a novel licence, renewable every two years, which allows our joint venture to bid for some RM1 billion worth of jobs for oil rig and structure fabrication. There are about four or five licence holders in this category,” he said.

Meanwhile, Enra is likely to return to the black following the completion of its disposal of RM85 million worth of property assets in Holiday Plaza, Johor, and Taman Shamelin Perkasa, Kuala Lumpur by the third quarter ended Dec 31, 2017 (3QFY18)

“We are at the tail end of the disposal of our legacy assets. It will raise new cash so we can look into other areas, and reduce debt. We believe we can return to the black in FY18, although it should be said that FY17’s RM87.8 million net loss was due to huge impairments.

“Growth is expected in FY19 with recurring income from our O&G projects especially the Myanmar contract,” he added.

Net profit in 1QFY18 declined 20% to RM1.6 million, from RM2.1 million a year earlier, due to lower contribution from its property development division and higher loss from investment holdings. Revenue fell 39.6% to RM23.9 million from RM39.7 million.

Enra’s share price was last traded at RM2.80, giving it a market capitalisation of RM377.77 million.
 

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