Dateline 2013-11-01, The Edge:
JUST six months after completing the acquisition of Seadrill Ltd’s Asian rig business for RM8.63 billion, SapuraKencana Petroleum Bhd (SKPB) is now forking out another RM2.85 billion to acquire Newfield Exploration Co’s equity interest in Malaysia.
The latest deal could add to SKPB’s current debt of RM11.4 billion as at July 31, something that has not gone down well with the market.
However, SKPB group president and CEO Tan Sri Shahril Shamsuddin reasons that the debt will begin to pare down substantially by next year.
“We expect our debt to go down to below RM10 billion over three years. Furthermore, the equity would have grown as profitability will increase the equity portion to reduce the debt-to-equity ratio to about 0.8,” says Shahril.
“In the next two years, while our debt level goes down, the focus for SKPB will be to develop the fields in Newfield,” he says, adding that the Newfield assets are cash-generating.
On top of this, SKPB’s other businesses are said to contribute about US$1 billion in earnings to the group while it looks to bid for more acreage and proven reserves for future developments.
Analysts believe the Newfield Malaysia acquisition will increase SKPB’s revenue by US$403.3 million in 2013, with contribution expected to grow by US$600.4 million in 2018.
It will also see SKPB’s earnings before interest, taxes, depreciation and amortisation (Ebitda) growing by US$209.2 million in 2013 and US$396.6 million in 2018 while the incremental increase in net profit would be US$155.8 million and US$289 million respectively.
Analysts expect SKPB’s net gearing to decrease to 1% in 2016 from 1.1% in 2013 and its net debt to Ebitda to decrease to 3.5% from 5.6%.
SKPB was formed after the merger of Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd. Shahril notes that while both companies were growing independently, their debt profile saw a mismatch where long-term investments were funded by short-term debts.
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Wata - Malaysian Oil and Gas Engineer 