Tanjung Offshore to revert to 'pure play' O&G service provider, says chairman

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KUALA LUMPUR (May 29): Amid the protracted global oil price slump, Tanjung Offshore Bhd announced today that it is looking to revert to a “pure play” oil and gas (O&G) service provider, as it views the current low oil prices as being non-sustainable in the long-term.

“We recognise the current decline in commodity prices, but are of the view that the lower price levels are not sustainable in the long term. Looking ahead, we believe that a growing population and rising levels of prosperity will see an increase in demand and consumption of energy,” said Tanjung Offshore chairman Datuk Mohd Hafarizam Harun in a statement today.

Mohd Hafarizam said the group is optimistic about significant improvements in its O&G acivities and is investing in technologies that will realise lower operating costs.

His statement came together with the group’s announcement that it has adopted a whistle-blowing policy to provide a platform for directors and employees to raise their concerns of any malpractices to strengthen the group’s corporate governance.

This push for greater transparency is subsequent to the arrest of a former director of the company for the alleged fraudulent acquisition of Gas Generators (M) Sdn Bhd in 2013 for RM34.3 million.

“The policy will enable every issue to be speedily investigated and for action to be taken and resolved effectively within the group, if possible,” said Mohd Hafarizam.

The group, fresh from a boardroom tussle earlier this year, took a cue from recommendations of a forensic audit by Ferrier Hodgson triggered by several “contentious transactions”.

Hafarizam said the group’s whistle-blowing policy was also in line with “best corporate practices” and serves as a major step for the group, towards restoring investor confidence.

“In step with this, we are also in the midst of conducting a thorough review of TOB’s standard operating procedures, guidelines and internal systems, to put right the shortcomings that gave way to corporate weaknesses in the past,” the chairman added.

Moving forward, Mohd Hafarizam said Tanjung Offshore (fundamental: 1.85; valuation: 0.9) has allocated RM250,000 per annum for various training programmes to upskill its employees, noting such training is in line with the government’s ‘bumiputera development agenda’, as almost 90% of its workforce are Bumiputeras.

As at 3:13pm, Tanjung Offshore was up half sen or 1.09% at 46.5 sen. The current price gives it a market capitalisation of RM178.16 million.

(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.)