KUALA LUMPUR (March 30): Cash-strapped Sapura Energy Bhd narrowed net losses to RM3.30 billion for the fourth quarter ended Jan 31, 2023 (4QFY2023), versus a huge RM6.76 billion net loss for the previous year’s corresponding quarter. 

The improvement in net losses was due to higher revenue and lower provision for foreseeable losses, albeit higher foreign exchange losses due to weakening of the US dollar against the ringgit, the company showed in an exchange filing on Thursday (March 30). 

Quarterly revenue more than doubled to RM1.21 billion from RM426.60 million a year ago, primarily driven by a higher percentage of completion of projects for the engineering and construction (E&C) segment, and higher rig utilisation days for the drilling segment. 

In the latest quarter, the group also made provision for impairment on goodwill on consolidation of RM1.46 billion, and provision for impairment on property, plant and equipment of RM1.15 billion.

For the full FY2023, Sapura Energy recorded a net loss of RM3.20 billion, which was lower against RM9.05 billion recorded for FY2022.

Revenue rose 10.9% to RM4.55 billion for FY2023 from RM4.10 billion a year earlier, contributed by higher revenue from the drilling segment, attributable to higher rig utilisation days in the latest year, and the operations and maintenance segment, due to higher approved claims.

In a separate filing, the company said the impairments were associated with higher weighted average cost of capital arising predominantly from global interest rate hikes. 

“Another driver of the impairment charges was a revised business outlook, mainly due to limited working capital and bank guarantee facilities, and a projected market down-cycle in the medium to long term,” Sapura Energy said. 

For FY2024, Sapura Energy said the group will continue to implement its reset plan to address unsustainable debt and resolve overdue claims by trade creditors. 

“Critical to the successful delivery of sustainable value to all stakeholders, the group is developing its regularisation plan to address its Practice Note 17 status, underpinned by the schemes of arrangement with lenders and creditors. The board of directors is committed to ensuring that the interest of all stakeholders will be considered in a fair and equitable manner,” it stated. 

The group has appointed MIDF Amanah Investment Bank as the principal adviser to help formulate its regularisation plan. 

Sapura Energy was unchanged at four sen per share at the time of writing, giving the company a market capitalisation of RM639.16 million.