On Wednesday, Sapura Energy announced it had signed a heads of agreement (HOA) with OMV for the stake sale, based on an enterprise value of US$1.6 billion.

KUALA LUMPUR: Sapura Energy Bhd’s earnings are expected to improve, in particular from savings in operating expenses, following the proposed sale of a 50 per cent stake in wholly-owned Sapura Upstream Sdn Bhd to Austria’s OMV Aktiengesellschaft (OMV AG).

MIDF Research said Sapura Energy would benefit from the reduced constrain on its cash attributable to the upstream business.

“Therefore, for financial year 2019 in particular, we are expecting the group to return to the black. The chunk of the group earnings will stem from the upbeat offshore activity levels of the E&C (engineering and construction) segment and sustainably higher crude oil prices of the E&P (exploration and production) segment,” it said in a research note today.

On Wednesday, Sapura Energy announced it had signed a heads of agreement (HOA) with OMV for the stake sale, based on an enterprise value of US$1.6 billion.

The HOA will also suspend any ongoing listing process for Sapura Upstream pending the completion of the negotiations.

Sapura Energy said the partnership was to strategically position Sapura Upstream to create sustainable long-term growth, expand portfolios and future business activities as well as realise synergies in the oil and gas sector.

MIDF Research said the proposed partnership would provide a better option to the listing of Sapura Upstream. This was so as the partnership was a faster alternative and eliminates the potential discount given by the capital market should Sapura Energy chose to list Sapura Upstream.

In addition, the firm said via the partnership, Sapura Energy was expected to benefit from new opportunities in the upstream segment and increasing market reach for its services segment where OMV AG operates in.

Sapura Energy’s orderbook currently stands at at RM16.7 billion, marking an inflection from financial year 2018 low for the past four years.

“Out of these, about RM5.2 billion and RM3.8 billion are expected to be recognised in financial year 2019 and 2020 respectively, while the remaining RM7.7 billion is to be recognised in financial year 2021 onwards. The company’s bidbook, including prospects is at US$13.1 billion,” MIDF Research said.

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