TotalEnergies and Mubadala’s leading company to acquire 50% stake in Sapura OMV of Sapura Energy

This article was first published in The Edge Malaysia Weekly from March 18, 2024 to March 24, 2024.

The race for exploration and production company SapuraOMV Upstream Sdn Bhd’s 50% stake in Sapura Energy Bhd has been narrowed down to two parties: Abu Dhabi state fund Mubadala and French multinational energy company TotalEnergies SE, banking sources said.

Although the bids are close, The Edge understands that TotalEnergies’ offer may be slightly higher than Mubadala’s. However, one source was quick to point out that the asking price was just one of several considerations, suggesting that Mubadala’s bid was still at a very early stage.

In an emailed response to The Edge on whether the sale of a 50% stake in SapuraOMV has become a two-horse race, Sapura Energy said: However, to maintain the confidentiality and integrity of this exercise, we are unable to comment further at this time. ”

Total Energy did not respond to inquiries as Mubadala could not be reached.

The offer price for Sapura Energy’s 50% stake in SapuraOMV is unknown, but previous reports put it at US$1.2 billion (RM5.65 billion).

It is worth noting that at the end of 2018, Austria’s OMV Aktiengesellschaft acquired a 50% stake in SapuraOMV from Sapura Energy for an enterprise value of $1.6 billion, consisting of an equity value of up to $1.25 billion and a stake of $350 million. Consists of $1,000,000 in debt.

TotalEnergies subsequently acquired OMV’s 50% stake in SapuraOMV for US$903 million. This includes his transfer to SapuraOMV of his USD 350 million loan granted by OMV. The acquisition is currently in progress and is expected to close in the second quarter of 2024.

Therefore, acquiring Sapura Energy’s 50% stake in SapuraOMV will give TotalEnergies full control over SapuraOMV’s assets.

SapuraOMV operates gas fields SK310 and SK408 located off the coast of Sarawak. The company owns 30% of SK310 and 40% of SK408. It also owns 40% of the shares in the SB412 block off the coast of Sabah and 30% of the shares in 30 blocks off the coast of Mexico.

Additionally, we have a number of offshore exploration permits in Western Australia and New Zealand’s Taranaki Basin, among others.

According to Sapura Energy’s 2023 annual report, the SK310 and SK408 assets in Malaysia produced 30,000 barrels of oil equivalent per day.

Despite its international footprint, Sapura Energy’s annual report for the financial year ending January 2023 states that SapuraOMV is “primarily the result of higher discount rates and increased impairment charges due to unsuccessful exploration results in the current year.” It is shown that it recorded a loss after tax of RM356 million. .

A review of the Companies Commission Malaysia (SSM) website revealed that SapuraOMV suffered a post-tax loss of RM450.85 million on revenue of RM1.4 billion for the financial year ended December 2022. Ta. As of the end of 2022, SapuraOMV’s total assets were RM7.76 billion and total liabilities were RM4.24 billion. SapuraOMV had a cumulative loss of RM1.21 billion during the period.

Who knows how Mubadala or TotalEnergies will change things for SapuraOMV.

Besides Mubadala and TotalEnergies, other companies believed to be interested in Sapura Energy’s 50% stake in Sapura OMV include Japanese oil and gas exploration company International Petroleum Development Corporation and Indonesia’s PT Medco Energi Internasional Tbk. there is.

For Sapura Energy, the sale of its 50% stake in SapuraOMV could be a game-changer. At current exchange rates, the US$1.2 billion price tag is equivalent to RM5.65 billion and could go a long way to supporting Sapura Energy, which has huge debt problems.

To put things into perspective, Sapura Energy has been a Practice Note 17 (PN17) company since the end of May 2022, a classification for cash-strapped companies. In mid-December last year, Sapura Energy received in-principle approval. Appeals from capitalists will allow it to proceed with its regularization plan and withdraw from PN17.

Selling 50% of SapuraOMV shares is the key to restructuring.

This could be the light at the end of the proverbial tunnel for Sapura Energy, which is 40% controlled by state-run unit trust fund Permodalan Nasional BHD and is struggling with heavy debt.

Last week, Sapura Energy was granted a three-month extension by the Corporate Debt Restructuring Commission (CDRC) to June 10 of this year (previously from March 10) to bring forward the deadline for protection from litigation on multi-currency loans. was recognized. a creditor. This is his second such extension obtained from CDRC.

Earlier this month, Sapura Energy and 22 of its wholly-owned subsidiaries obtained a new summons and injunction from the High Court to proceed with the debt restructuring process. This enabled the company to take steps to restructure its multi-currency loan of approximately RM10.88. The amount owed to trade creditors amounts to approximately RM1.5 billion and there is no threat of litigation.

The company has been profitable for three consecutive quarters, with order book of RM5.4 billion.

For the nine months to October 2023, Sapura Energy recorded a net profit of RM219.78 million on revenue of RM3.2 billion. In the same period last year, the company earned a net profit of RM99.52 million from sales of RM3.33 billion.

As at end-October, Sapura Energy had cash, deposits and bank balances of RM1.37 billion, while on the other side of the balance sheet it had short-term borrowings of RM11.01 billion and no long-term debt. The company’s cumulative loss amounted to RM16.58 billion, resulting in a shareholder deficit of RM3.3 billion during the period.

Commenting on its outlook, Sapura Energy said, “Business conditions in the engineering and construction and operations and maintenance divisions are challenging, and we expect this to continue through the rest of the year.” This situation is further exacerbated by the group’s lack of access to working capital and bank guarantee facilities as it moves forward with restructuring plans to normalize its financial position. ”

Last Friday, Sapura Energy closed at 4.5 sen, translating into a market capitalization of RM826.9 million.

Save by subscribing to us for your print and/or digital copy.

P.S. The Edge is also available at: Apple’s App Store and Android Google Play.

Related Article


Leave a Comment