This article first appeared in The Edge Financial Daily on July 10, 2018

KUALA LUMPUR: Sapura Energy Bhd has engaged advisers to evaluate and advise on the potential listing of its exploration and production (E&P) business.

The Australian yesterday reported that Sapura Energy is believed to be weighing an Australian listing of its operations in a float that could be worth as much as A$2.7 billion (RM8.13 billion).

The report, quoting unidentified sources, said “the plan comes as Sapura Energy moves to pay down its US$4.5 billion (RM18.13 billion) debt pile, largely to Maybank (Malayan Banking Bhd), and as the oil price rally attracts equity investors to the resources space”.

“BoA Merrill Lynch is working for Sapura Energy and while it has made it known that it has an interest in listing its E&P assets on Bursa Malaysia, it is understood that the group is weighing the merits of listing in Australia instead.

“An Australian listing would offer the company a more solid investor base,” the report added.

When contacted by The Edge Financial Daily yesterday, Sapura Energy did not confirm nor deny the report, saying the group will make the necessary announcement should there be any material development on the matter.

“As previously announced, the listing of Sapura Energy’s E&P business would provide an avenue for the company to monetise its assets. The company has engaged advisers to evaluate and advise on the potential listing of the E&P business,” the group added.

In a June 29 statement to announce its results for its first financial quarter ended April 30, 2018, Sapura Energy said the group remained committed to strengthening its financial position.

“To this end, the group has identified several initiatives, including the potential listing of the E&P business and a possible capital raising exercise,” it said.

This is not the first time news has surfaced on Sapura Energy’s E&P unit’s listing.

Last Monday, the Wall Street Journal reported that Sapura Energy was planning to list its E&P unit on Bursa Malaysia as early as the fourth quarter of this year. The report added that Sapura Energy was planning to raise US$750 million for its initial public offering in an “effort to take advantage of the recent surge in global oil prices”.

The report, quoting sources, said Sapura Energy was “looking at a valuation of between RM5 billion and RM7 billion for its E&P business”, and that “listing its profitable E&P unit, which accounted for nearly 30% of the group’s operating profit for its financial year ended Jan 31, 2018, will also help Sapura Energy pare down its debt”.

Yesterday, Sapura Energy topped Bursa’s actives list, with 101.66 million shares traded. After hitting an intraday high of 62.5 sen, its shares closed up one sen or 1.65% to end at 61.5 sen yesterday, with a market capitalisation of RM3.69 billion.

Year to date, Brent crude oil prices have risen 16% to US$77 per barrel yesterday.