KUALA LUMPUR (Sept 6): Sapura Energy Bhd’s oil & gas field — SK408 production sharing contract (PSC) development project located offshore Sarawak — will start generating earnings soon.
Sapura Energy announced that it has signed a gas sales agreement with Petroliam Nasional Bhd (Petronas) today.
“I cannot say whether Sapura Energy will be profitable next year (FY2021), but I believe that the production from SK408 will help with the situation,” said its president and group CEO Tan Sri Shahril Shamsuddin at a press conference announcing the gas sales agreement with Petronas.
Shahril is confident of robust demand of LNG in the region.
According to him, the increase in exploration and production of oil and gas would translate into more possible contract wins for Sapura Energy.
The SK408 PSC is expected to produce first gas by the end of this year with some 400 million cu ft of natural gas per day. By 2023, the block is expected to produce up to 1,000 million cu ft of natural gas per day, said Shahril.
The block, which is part of the Central Luconia gas field offshore Sarawak, has a proven and probable reserves of between seven and 10 trillion cu ft of natural gas.
SapuraOMV Upstream Sdn Bhd, in which Sapura Energy holds a 50% stake, owns a 40% equity interest in the block. Both Sarawak Shell Bhd and Petronas Carigali Sdn Bhd owns a 30% stake each in the oil & gas block.
In the first quarter ended April 30, 2019 (1QFY20), Sapura Energy narrowed its loss after tax to RM109.33 million from RM136.54 million in the corresponding period, thanks to higher profit of
the engineering and construction business, as well as narrowing of losses at the drilling business.
The production from the block will triple SapuraOMV’s net entitlement of production to 30,000 barrels of oil equivalent per day, and place the company among the top five in terms of annual production in Malaysia, after Petronas, Royal Dutch Shell and ExxonMobil.
Based on the current reserves and production rate, SapuraOMV has a reserve life index of about 20 years, said its CEO Muhammad Zamri Jusoh. He said the SK408 PSC is under budget and delivered
ahead of time, with the parties only having achieved final investment decisions in March 2018.
“We have managed to bring the field online in less than two years. The production of 400 million cu ft per day is just from the first phase and we are still making discoveries from the SK408 block,” said Zamri.
SapuraOMV was created in 2014, after Sapura Energy bought the Malaysian business of Newfield Exploration Co for US$898 million.
Sapura Energy was trading at 27 sen per share as at last Friday, which is below its rights issue price of 31 sen. Its market capitalisation stood at RM4.33 billion.