Revenue from Malaysia operation for the current financial quarter was higher mainly contributed by the engineering and construction activities from on-going projects. The works on Phase 2 of the Pengerang Deepwater Terminal are progressing as schedule. In addition, the Group was also involved in various projects such as the MLNG Train 9 and SAMUR piping works. However, the higher revenue recorded from these activities was offset by lower sales in specialist products and services and upstream activities. This had resulted to a drop in net profit after tax contribution from Malaysia operation for the current financial quarter against same period last year.

On the International operation, revenue for the current financial quarter was lower against same period last year. Despite the lower revenue, international operation recorded a higher net profit after tax for the current financial quarter. This was mainly attributable to higher fabrication activities in New Zealand and better margins on sales of specialist products and services which are mostly denominated in US dollar.

The Group’s share of joint ventures and associates results for the current financial quarter of RM12.1 million was more than double compared to RM5.4 million recorded in same period last year. This was due to the contribution from Pengerang Independent Terminal which has commenced its full operation and has fully leased out its storage capacity.

The Group’s profit before tax for the current financial quarter of RM80.6 million was 10.3% lower against RM89.8 million recorded in the preceding quarter. This was attributable to the slower upstream activities and lower sales of specialist products and services.

Prospects

As a leading integrated technical services provider to the upstream, midstream and downstream sectors in the oil, gas and petrochemical industry, the Group continues to proactively enhance and rationalize its human capital development to support the anticipated growth of its business activities. The Group is confident that its business model is well structured and can withstand the current oil price volatility and currency movements.

The drop in oil prices will lower the overall costs of processing, manufacturing and production of a wide range of petroleum and petrochemical products. This would have a positive impact on the midstream and downstream sectors of the oil and gas industry. The current oil price development reinforces the Group’s strategy to develop and invest in the Pengerang Deepwater Terminal for the long term.

The demand for storage facilities is strong for crude oil and products. Further development of the Pengerang Deepwater Terminal will provide more opportunities for the Group’s engineering, procurement, construction, commissioning and fabrication services. The Group will continue to benefit from long term recurring rental income derived from additional tank terminal facilities when they go into operations.

Phase 1 of the Pengerang Deepwater Terminal is in full operation with 1.3 million m3 fully leased out. To date, more than 300 vessels including supertankers (“VLCC”) have used the terminal for loading and unloading purposes.

The Group has commenced EPCC works on Phase 2, which is the development, construction and operation of the facilities required for the handling, storage and distribution of crude oil, petroleum, chemical and petrochemical feedstock, products and by-products to and from the Refinery and Petrochemical Integrated Development (“RAPID”) complex. This will keep the Group’s Engineering & Construction Division and Fabrication Division busy over the next few years. Phase 2 will have 2.1 million m3 of storage capacity with a total investment cost of RM6.3 billion and is scheduled to be completed progressively in 2018 and 2019.

The Group has also embarked on the joint venture with PETRONAS Gas Berhad for the development of Liquefied Natural Gas (“LNG”) regasification facilities comprising a regasification unit and two (2) units of 200,000 m3 LNG storage tanks with an initial send out capacity of 3.5 million tonnes per annum for a total investment cost of RM2.7 billion. This project is scheduled to be completed at the end of 2017.

The Group is now working towards securing new potential partners for subsequent phases of the Pengerang Deepwater Terminal, which include the development of more petroleum, petrochemical and LNG storage facilities.

The Group has recently secured the first fabrication job to be fabricated at the newly completed Dialog Fabricators Pengerang Facility (“DFPF”) and is now targeting for more jobs, which will surface throughout the duration of construction of the RAPID project next door.

In the upstream sector, the recent infill drilling campaign and production enhancement initiatives had resulted in an increased oil production from the Bayan field. Efforts are ongoing to identify and mature new oil opportunities planned to be implemented in 2017/2018. The Group is also participating in field development studies for D35, J4 and D21 fields to further nurture new oil opportunities. In addition,  the drilling campaign for D35 is underway.

Barring unforeseen circumstances, the Group is optimistic that it will continue to deliver a healthy performance for the financial year ending 30 June 2016.