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This article first appeared in The Edge Financial Daily on March 27, 2018

KUALA LUMPUR: Amid expectations the group will deliver another set of weak results this week for the fourth financial quarter ended Jan 31, 2018, Sapura Energy Bhd yesterday announced additional new deals after bagging six contracts worth some RM3 billion since early 2018.

The group said it has cemented its foray into New Zealand with a series of farm-in agreements to five offshore exploration permits in the oil and gas region of the Taranaki Basin.

Its wholly-owned subsidiary Sapura Exploration and Production (NZ) Sdn Bhd (Sapura E&P) has secured the New Zealand government’s approval for agreements with OMV New Zealand Ltd and Mitsui E&P Australia Pty Ltd.

“All five offshore exploration permits are located in shallow waters within the prolific oil and gas region of the Taranaki Basin, where discovered volumes to date total more than 2.5 billion barrels of oil equivalent. The agreement provides access to a large acreage footprint of more than 8,900 square kilometres,” Sapura Energy said in a Bursa Malaysia filing.

The group, whose previous six contracts were worth a total of RM3 billion, did not provide the value of yesterday’s deals.

Sapura Energy president and chief executive officer Tan Sri Shahril Shamsuddin said the agreements are a strategic entry for Sapura E&P into New Zealand, and that the company will work with the respective partners to mature potential drilling locations prior to making well commitments.

“The joint venture will see Sapura E&P utilising its subsurface technical expertise to support the exploration activities within these exploration areas,” he said, adding the entry into New Zealand may open up opportunities in a proven area for Sapura E&P. Pursuant to the agreements, Sapura E&P will have a 30% interest in all five exploration permits, which will be operated by OMV.

Last week, Sapura bagged the engineering, procurement, construction, installation and commissioning (EPCIC) contract for the Pegaga Development Project from Mubadala Petroleum. The job is to be undertaken by its wholly-owned subsidiary Sapura Fabrication Sdn Bhd at the offshore integrated central gas processing platform (ICPP) facility in Block SK320, in offshore waters off Sarawak.

Mubadala Petroleum is the operator of Block SK320 with a 55% interest, with Petronas Carigali holding a 25% stake and Sarawak Shell the remaining 20%. This Mubadala Petroleum contract is worth about RM2.1 billion, while the previous five contracts secured earlier this year were valued at RM905 million.

For the nine months ended Oct 31, 2017, Sapura Energy reported a net loss of RM217.95 million, against a net profit of RM380.64 million a year earlier, because of lower revenue from its drilling business and a lower share of profit from joint ventures. Revenue fell 19% to RM4.71 billion from RM5.84 billion.

Sapura Energy’s share price plummeted to a new all-time low of 41 sen on March 14 after shrinking 39.7% from early 2018. But subsequent to the project announcements, the stock has rebounded 36.6% to close at 56.5 sen yesterday, with a market capitalisation of RM3.39 billion.

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