KUALA LUMPUR (June 28): SapuraKencana Petroleum Bhd's first quarter net profit fell 58% to RM110.31 million from a year ago as the oil and gas (O&G) support services provider contended with lower demand for its rigs as oil companies spent less on upstream operations.

In a statement to Bursa Malaysia today, SapuraKencana, which also undertakes O&G exploration and production, said lower crude oil output and prices had also curbed income growth.

SapuraKencana said net profit fell to RM110.31 million in the first quarter ended April 30, 2016 (1QFY17) from RM260.69 million. Revenue was lower at RM1.94 billion versus RM2.26 billion.

SapuraKencana's oil rigs are placed under its drilling division while exploration and production operations are undertaken via the energy unit.

The company said group revenue decline was "mainly attributable to lower revenue from drilling and energy business segments". The company said certain rigs were "off contract" during the quarter.

Looking ahead, SapuraKencana said crude oil price outlook was still uncertain and capital spending in the O&G sector was expected to be low in the short term.

Against such backdrop, the company said it was focusing on orderbook growth and replenishment in key markets. The group said it was also rebasing its cost and increasing operational efficiency.

"Due to declining capital spend, the group expects to face stiff competition which may cause pressure on margins.

"The board continues to anticipate the challenging environment to persist over the medium term. However, the group is executing its strategic initiatives and operational plans to navigate through this period," SapuraKencana said.

At 12:30pm today, SapuraKencana shares rose one sen or 0.8% to settle at RM1.33 for a market value of RM7.97 billion. The stock saw some four million shares traded.