BARAKAH OFFSHORE PETROLEUM BERHAD 2QFY18 Corporate Presentation 29 August 2018
Snapshot of Barakah Integrated oil and gas services provider Founded Bloomberg Code – BARAKAH : MK Stock Code - 7251 August 2000 Share price RM 0.14 (1) Market capitalisation RM 124 million (1) FY2017 Revenue No. of shares issued 827 million RM 310 million Listing Main Market Listing Date 6 November 2013 Orderbook (1) As at 27 August 2018 RM1.4 billion (1) Shariah-compliant stock Tenderbook Shareholding RM1.5 billion (1) as at 27 Aug 2018 Nik Hamdan, No of staff Founder 140+ 40.1% Main asset Others Samling 46.3% Pipelay barge Energy Kota Laksamana 101 Sdn Bhd 2 13.6% Note: (1) as at 31 July 2018
Our Competencies INSTALLATION AND CONSTRUCTION SERVICES (“ICS”) PIPELINE AND COMMISSIONING SERVICES (“PCS”) Topside Major Maintenance (“TMM”) and Hook-up Offshore Transportation and Installation (“T&I”) Commissioning (“HUC”) § Shore approach § General maintenance works § Pipeline/riser/submarine cable installation § Pipeline repairs § Investigation and checks § T&I of offshore structures § Hook-up for piping, tie-in and § De-commissioning of oilfield structures structural members § Underwater services Engineering, Procurement, Construction and Commissioning (“EPCC”) § Full EPCC of Onshore Gas Transmission Pipeline Services Pipeline Construction § Mechanical and Piping Erection for § Pre-commissioning and commissioning: cleaning onshore process plant maintenance, gauging & § Minor Fabrication services flooding, hydrotesting, § Shutdown Maintenance Services dewatering and drying § EPCC of small to medium size process § De-commissioning: Flushing, facilities degassing and flooding, preservation and Ship Management and Chartering abandonment § Pipelaying barge § Derrick lay barge § Accommodation work barge § Work boat 3 § DP vessels
Our Position in O&G Value Chain Beneficiary of on-going development works Exploration Exploration stage: 1) Seismic, geophysical 2) Drilling After oil discovery/FDP approval Development stage: Engineering & design Development UPSTREAM Offshore infrastructure / fabrication EPC/EPCIC Transport to Offshore & Installation Installation of pipeline & facilities Hook-up & Commissioning Installation & maintenance Development drilling Platform operations / Production Production Lifetime of a Facilities Maintenance & Servicing Production Field Maintenance & Marine Services De-commissioning DOWNSTREAM Development Pipeline & Tie-Ins EPCC Onshore Activities Construction & Onshore Facilities Installation 4
Our Clients Petroleum Arrangement Contractor (PAC) Operators 11. Enquest Petroleum** 1. PETRONAS Carigali 21. PTTEP 12. Sapura Energy 2. Conoco Philips 22. Coastal Energy** 13. Repsol 3. Lundin Petroleum 23. Vestigo Petroleum** 14. Exxon Mobil 4. JX Nippon 15. Shell 5. Mubadala Apart from these PAC operators, § 16. PEXCO N.V. 6. Ophir Energy Petronas Gas Bhd and Petronas 17. Murphy Oil 7. HESS Floating LNG 1 (L) Ltd are also major clients in the downstream 18. Ophir Production 8. Kebabangan Petroleum segment Operating Company 19. PCPP Operating All PAC operators are potential § Company 9. TOTAL E&P clients under Umbrella T&I contract 20. Petrofac 10. RHP Mukah 22 PSC Operators 4 RSC Operators Current involvement * RSC Operator Recent involvement ** Operates both PSC and RSC 5
Review of Financial Performance FY2017 and 2Q FY2018
FY2017 Revenue Impacted by slower O&G sector activity Revenue § Lower FY2017 revenue on the back 622.6 of less work orders issued as oilfield 592.6 operators tighten opex budget. 310.9 § No revenue derived from pipe lay barge KL101 due to lack of significant offshore installation project in 2017. FY2015 FY2016 FY2017 Ongoing actions: ü Actively bidding for projects following steady recovery in oil price ü Securing more work orders for existing term contracts 7
Segmental Revenue Breakdown FY2017 1HFY18 FY2016 RM 46.8 RM 124.1 m RM 135.3 m 60% m 40% 22% RM622.6 million RM310.9 million RM78.5 million RM 186.8 RM 31.7 m m RM 487.3 60% 40% m 78% Pipeline and commissioning services (“PCS”) Installation and construction services (“ICS”) § Lower contribution for ICS division by >50% in FY2017 as upstream oilfield services operators to maintain current activities in the brownfield and maintenance segment, with no significant capex increase. § For the next 2 years, Barakah will focus more towards bidding on T&I-related projects and carrying out PCS-related activities, specifically hook-up commissioning services and underwater services. 8
FY2017 Loss Breakdown Net Profit/(Loss) 18.8 14.5 (216.8) General operating cost (38) Projects operating loss mainly due to cost overrun at Pengerang Gas Pipeline and RAPID Firewater Pipeline (89) Network, resulted in prolongation cost and cost associated with changing work method. Fixed overhead cost for KL101 including depreciation, (45) finance cost, maintenance and upkeep. KL101 impairment due to drop in market demand (44) FY2015 FY2016 FY2017 9
2QFY18 and 1HFY18 Financials Improving financial performance on the back of effective cost savings measures Y-o-Y Q-o-Q Y-o-Y FYE 31 Dec (RM m) 2QFY18 2QFY17 1QFY18 1HFY18 1HFY17 Chg % Chg % Chg % 1 2 Revenue 59.2 52.6 +12% 19.4 +205% 78.5 129.5 -39% Gross loss 3 (9.2) (61.0) +85% 2.0 > -100% (7.2) (44.1) +84% EBITDA (6.2) (73.6) +92% (10.8) +43% (17.1) (66.5) +74% Loss before tax (15.3) (81.9) +81% (19.8) +23% (35.4) (86.7) +59% Net loss (15.5) (82.1) +81% (19.9) +22% (35.4) (86.7) +59% 4 2QFY18 revenue increased on the back of ongoing projects in the PCS segment. 1 Lower revenue for 1HFY18 due to exceptionally low roll-outs of work orders by major 2 oil and gas players in 1QFY18. Gross loss for 2QFY18 mainly due to a provision for variation order work claim of 3 RM13.3 million in respect of a completed project. Net loss for 2QFY18 and 1HFY18 narrowed on the back of the Group’s ongoing cost 4 rationalisation efforts. 10
Resilient Financial Position Reducing overhead costs and conserving cash flow FYE Dec/ FY16 FY17 1H FY18 (audited) (audited) (unaudited) RM million § Recorded impairment of pipelay barge of RM44 million in FY2017. Non current assets 400.7 297.4 282.6 § Principal payment for pipelay barge Current assets 418.5 254.0 218.2 loan will only commence in FY2019, Total Assets 819.2 551.4 500.8 contributing to better future cash flow. Total equity 423.6 203.2 160.8 § Reduced cash balances mainly due Non-current liabilities 170.0 171.3 170.4 to: Operations as Barakah Current liabilities 225.6 176.9 169.6 o incurred operational loss Total liabilities 395.6 348.2 340.0 Financing cost - mostly for o pipelay barge loan Total Equity & Liabilities 819.2 551.4 500.8 Lower borrowings mainly due to: § Lesser utilisation of working Cash balances (RM million) 220.5 132.1 107.5 o capital trade finance facilities. Total borrowings (RM million) 256.6 225.4 218.6 § Increased net gearing due to lower Net assets/share (RM) 0.51 0.25 0.20 shareholders’ funds Net gearing 0.09x 0.46x 0.69x 11
Future Outlook
O&G Industry Steady Recovery Barakah to benefit from more work coming on stream Brent crude oil price (USD per barrel) § Oil price picking up on the back of output cut of 1.8 million barrels per day 7-month average by OPEC and non-OPEC members Jan-18 to Jul-18 and geopolitical tensions. USD71.4/bbl § Oilfield operators cautiously optimistic 7-month average on sustainability of oil price movement Jan-17 to Jul-17 trend. USD52.2/bbl § Sustainable oil price recovery encouraging oilfield operators to potentially increase capital spending and production, benefiting Barakah. § More market surveys and bidding activities initiated by oilfield operators. 13
MCM outlook to remain stable Increasing number of projects and ageing facilities Source : Petronas Activity Outlook 2018-2020 14
Recent contracts secured Replenishing orderbook 2017 2018 ü Awarded contract for provision of basic and detailed ü Bade for more than 20 project packages engineering, procurement, construction and § Est. value: RM1.5 billion commissioning package § Project: Rejuvenation of Urea Ship Loading ü Work orders secured (Jan – Aug 2018) worth Facilities Project at Asean Bintulu Fetilzer Plant RM175 million in Sarawak § Est. value: RM35 million ü Awarded 2 contracts for provision of Pan- § Duration: 2017 to 2019 Malaysia MCM services under Package A § Client: ü Awarded contract for provision of Well Intervention vessel, support vessel and services for: Enquest Petroleum Production o Malaysia Ltd § Abandonment and Decommissioning of Chinguetti and Banda Field, Mauritania Sapura Exploration and Production o (PM) Inc. § Est. value: USD14.3 million § Duration: 2018 to 2023 ü Expect to secure more MCM contracts moving forward 15
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