KUCHING: Analysts maintain their optimistic view on Sapura Energy Bhd’s (Sapura) improving prospects despite the financial distress faced by rig operator Seadrill which is involved in the group’s 50 per cent-owned joint venture (JV) operations in Brazil.
In a report, the research team at AmInvestment Bank Bhd (AmInvestment Bank) expected the group’s 50 per cent owned joint venture involving six flexible pipelay support vessels (FPSV) to maintain operations although its JV partner Seadrill has filed for voluntary Chapter 11 bankruptcy protection in the US for its Asian-based subsidiaries.
It noted that Seadrill said that the action was “a protective measure to support Seadrill’s broader comprehensive financial restructuring” and would “in no way affect the safe and efficient operation of the Asia Offshore Drilling offshore drilling units”.
Sapura has also affirmed that the Chapter 11 filing of Seadrill’s Asian operations does not involve Sapura-Seadrill’s FPSV operations which are mainly undertaken in Brazil, nor does this development trigger any cross-default for the JV financing structure.
Currently, it pointed out that five of the FPSVs are operating in Brazil for Petrobras. However, management is hoping to secure an extension for Sapura Topazio at the Marlim field in the Campos Basin while Sapura Diamante, which has been out of firm contract since last year, currently works on a short-term charter at Dos Borcos Port field in the Gulf of Mexico for Hokchi Energy.
On a more positive note, AmInvestment Bank highlighted that for 2021 to 2023, 8 greenfield and 30 brownfield field development projects are expected to be sanctioned over the next 36 months.
“For this year alone, domestic bids could be opened for another CPP in excess of 7,500 tonnes, five wellhead platforms weighing between 1,000 and 7,500 tonnes and one ‘light’ wellhead platform below 1,000 tonnes.
“This underpins our view that Sapura’s order book momentum is set for a transformative turnaround with the group bidding for a massive RM38.8 billion (up 32 per cent quarter-on-quarter) of new jobs besides even larger prospective projects worth RM68 billion amid the brightening outlook in upstream capital expenditure (capex) upcycle,” the research team opined.
Meanwhile, it noted that the financial close for the restructuring deal for Sapura’s RM10 billion syndicated debt has been delayed yet again from January towards the end of this month due to the
participating banks’ approval process.
“However, our channel checks affirm that the principals have agreed to the terms of the deal,” it said, noting that the deal would extend the loan for another seven years without any substantive interest cost increases, which it believed was assisted by Sapura’s largest GLC-backed shareholder.
“Also, Sapura has secured additional working capital of RM1.2 billion for its ongoing and prospective projects,” it added.
“Against the backdrop of improving prospects of new jobs across the globe and underpinned by a soon-to-be revitalised RM10 billion debt structure by the end of this month and more optimistic crude oil prices, the stock currently trades at an undeserved fire-sale 0.2-folds PBV,” AmInvestment Bank said.
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