National oil company Petroliam Nasional (Petronas) is close to awarding RM8 billion to RM10 billion worth of contracts as part of its maintenance, construction and modification (MCM) initiatives, sources familiar with the matter tell The Edge. It is understood that a number of companies have been notified of their successful bids, with letters of award (LOAs) set to follow soon.
“There is some form of confirmation [on the companies securing jobs] already, but the LOAs are still pending for most [of the successful bidders],” one source says. Another source explains that the contracts are on a five-year basis and broken up into 15 to 16 packages. They will commence early next year with an option for two extensions, the first for three years and the second for a two-year time period. The average value of each package is about RM500 million. If the companies exercise the options for extension, the contract value could double, which augurs well for them. It is understood that the companies will require Petronas’ consent before announcing their contract wins, which means any announcement of the awards may take time.
For its financial year ended June 2024, Carimin Petroleum registered a net profit of RM46.24 million, up 101.5% from a year ago, as revenue gained 21.55% to RM309.43 million.
Sapura Energy, which is in the cash-strapped Practice Note 17 category of Bursa Malaysia, ended trading last Thursday at three sen, which is its 52-week low, for a market capitalisation of RM551.3 million.
The company, which was once the second largest oil and gas service provider in the world, managed to register a net profit of RM76.9 million on revenue of RM2.38 billion for its six months ended July this year. For the first six months of FY2023, Sapura Energy reported a net profit of RM188.89 million on turnover of RM2.09 billion.
The fortunes of most of the oil and gas companies hinge on oil prices, which surged above US$80 per barrel on Oct 7, as tensions mounted in the Middle East and supply disruptions in the US Gulf of Mexico heightened from a major hurricane.
The benchmark Brent crude, which was testing the US$81 band early last week — its highest since August — tapered off to US$78 by Thursday. Nevertheless, Brent crude is up about 20% from early September.
This article first appeared in The Edge Malaysia Weekly on October 14, 2024 – October 20, 2024
