KUALA LUMPUR: Sapura Energy Bhd said on Thursday it expects a delay in projects due to the historic rout in oil prices and as widespread coronavirus shutdowns hit demand.
“Delays are inevitable,” chief executive Shahril Shamsuddin said in an earnings conference call, adding that it could take 18-24 months for the oil market to recover due to high inventory levels.
Sapura is aiming to lower operating costs by at least RM500 mil per year to adapt to the drop in demand and oil prices, Shahril said, adding that the company was budgeting for a long-term oil price of US$40 to US$45 per barrel.
Brent crude rose around 10% to US$24.90 a barrel on Thursday, though not too far from a more-than-20-year low hit earlier this month.
Demand has been hit by movement and business curbs implemented to contain the spread of the coronavirus. The Organisation of the Petroleum Exporting Countries (OPEC) and other major producers have announced output cuts.
On Wednesday, Sapura posted a loss from continuing operations of RM4.23 bil for the fourth quarter ended January, wider than the RM2.23 bil loss last year. Revenue slumped 25% to RM1.11 bil.
The losses included impairment charges of RM3.04 bil and a RM438.8 mil provision to account for project delays.
The Malaysian firm had announced salary cuts and job cuts earlier this week.
The company is also looking to refinance loans by the end of the year, Shahril said. – April 30, 2020, Reuters
