Malaysian contractor and upstream player Sapura Energy is bidding for and has its sights on new work totalling 123 billion ringgit (US$30.02 billion), of which 6% represents opportunities in the offshore wind sector.

Sapura’s current order book is valued at 13.7 billion ringgit, which includes 2020 wins such as three wellhead platforms for Saudi Aramco’s Zuluf, Ribyan and Abu Safah oilfields, and pipeline construction work at the Al-Khalij field in Qatar.

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Sapura’s latest awards include the turnkey contract for Hess’ North Malay Basin full field development Phase 4A and the engineering, procurement, construction, installation and commissioning contract for the mercury removal unit for Mubadala Petroleum’s Pegaga integrated central processing platform.

Sapura has already secured around 80% of its revenues for the 2022 financial year.

Agility and resilience

“We proved our agility and resilience by weathering an economic downturn and a pandemic,” said Sapura chief executive Anuar Taib.

“Sapura Energy is now on firm footing for sustainable growth, looking beyond its existing market to embrace the energy transition.”

As part of its diversification into renewable energy, Sapura has commenced installation of wind turbine monopiles at the Yunlin offshore wind farm in Taiwan and has increased bidding activities in the offshore wind segment.

Sapura is also focusing on gas as a transition fuel, with a major portion of its engineering and construction activities supporting the development of natural gas assets around the globe. Gas also accounted for 85% of its production in the last financial year.

The company’s board said it expects a recovery in the energy industry, following improving oil prices and the roll-out of the Covid-19 vaccination programme globally.

“The addressable market for Sapura has increased significantly in the next five years, with current bids and prospects valued at 123 billion ringgit, of which 6% represents opportunities in offshore wind.”

More success in the renewable energy sector is said to bode well for the group’s transition beyond oil and gas.

“In all, the board remains confident that the turnaround trends seen in the third and fourth quarter of the 2021 financial year will lead to better group performance in the 2022 financial year.”

Sapura made a net loss of 160.3 million ringgit for the financial year ended 31 January 2021after weathering the fallout of the coronavirus pandemic and resulting oil price crash.

Revenues for the 12 months totalled 5.3 billion ringgit, down 17% year-on-year.

The revenue decline is said to be “reflective of the pandemic’s disruptive impact on the group’s business, following shocks to the oil and gas market and radical adjustments to the industry’s standard operating procedures”.

“The group achieved three important objectives in a very challenging year: we kept our people safe amidst the pandemic, we delivered on promises to our clients despite operational difficulties, and we remained on-track in the transformation plan we began in 2019,” said Anuar.

Even though Sapura took a Covid-19 related hit of 286 million ringgit, it hailed the significant improvement from its 4.6 billion ringgit net loss in the previous financial year, and the company achieved an EBITDA margin of 15%.

Sapura registered three positive quarters in the 2021 financial year before positing a net loss of 215.3 million in the final three months, due to lower profit margins in its E&C segment.

The E&C segment sustained additional costs due to Covid-19 and by working through the monsoon season – the latter alone is said to have cost Sapura 303 million ringgit.

This estimate includes supplementary expenses due to supply chain delays, quarantine restrictions on crew and vessels, mobilisation costs and regular Covid-19 testing on employees at all workplaces, onshore and offshore.

Unrecovered costs

“To date the entire Covid-19 costs and 149 million ringgit in weather-related costs, remain unrecovered,” Sapura said on Tuesday.

“The group will be working with clients to acknowledge and resolve these costs in the current financial year.”

The company last year completed 24 oil and gas projects for clients while its upstream joint venture SapuraOMV doubled production to 37,000 barrels of oil equivalent per day following start-up of its Block SK 408 asset offshore Sarawak.

The group also made good progress in its Acceleration Program, a comprehensive optimisation plan for lean and efficient operations that was launched two years ago.

Sapura is executing some 270 initiatives, valued at 1.3 billion ringgit, of which approximately 760 million ringgit has been implemented to date, with 430 million ringgit realised.

These initiatives include improvements in operations productivity, supply chain optimisation and reviews of commercial opportunities within existing contracts.

Sapura also implemented salary reductions and a right-sizing exercise in the last financial year.

To improve "financial headroom and liquidity”, Sapura recently completed a planned refinancing exercise and secured additional working capital facilities, in line with its capital management programme.