KUALA LUMPUR (Sept 15): SapuraKencana Petroleum Bhd's net profit sank 77% to RM104.09 million in its second quarter ended July 31, 2015 (2QFY16) from RM445.8 million a year earlier, primarily on its oil and gas (O&G) asset impairment provision.

In a filing with Bursa Malaysia today, SapuraKencana said revenue increased to RM2.8 billion from RM2.69 billion.

Cumulative 1HFY16 net profit fell to RM364.78 million from RM955.22 million a year earlier. Revenue was lower at RM5.06 billion compared to RM5.14 billion.

SapuraKencana's income statement showed that the group registered O&G asset provision of RM539.85 million during 1HFY16. The company had registered the total amount during 2QFY16.

During 2QFY16, the significant provision had offset revenue rise as the group registered higher contributions from new international projects from the engineering and construction (E&C) division.

SapuraKencana said the rise in revenue was also a result of additional contributions from new rigs that were not in operation a year earlier.

It said excluding the O&G asset provision of RM539.85 million during the quarter, the group would have recorded higher profit before tax (PBT) at RM601 million against RM526.69 million a year earlier.

"The increase in the current quarter PBT is mainly attributable to higher profit before taxation derived from the services divisions namely E&C and drilling.

"(This was) offset by lower contribution from the energy division due to lower average realised oil price per barrel achieved, in line with the downward trend of crude oil prices," SapuraKencana said.

Moving forward, the group said it anticipated a challenging global O&G industry amid lower crude oil prices.

Cheaper oil has resulted in the reduction and postponement of offshore O&G projects, according to SapuraKencana.

"The robust order book we have built provides the group certainty in revenue outlook through FY17 (financial year ending Jan 31, 2017).

"Our immediate strategy is to continue our focus on adding to the order book and enhancing operational efficiencies to remain resilient during this period," it added.

At 2.32pm today, SapuraKencana shares changed hands at RM1.85 for a market capitalisation of RM11.09 billion.

The stock saw some six million shares transacted.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)