Malaysia’s largest oil and gas services company is planning to raise up to $750 million through an initial public offering of its exploration and production unit, in an effort to take advantage of the recent surge in global oil prices.
Sapura Energy SAPNRG -3.31% Bhd., which has a market capitalization of 3.72 billion ringgit ($920 million), is planning to list its unit on the local stock exchange as early as the fourth quarter of this year, people familiar with the plans said.
Sapura Energy didn’t respond to requests for comment.
Malaysian oil companies, which until the middle of last year were slashing jobs and cutting costs, are starting to see profitability rise due to higher global oil prices recently. Since July last year crude oil prices have gained 56%.
The country’s largest oil company, state-owned Petroliam Nasional Bhd. or Petronas, reported a 26% jump in its first-quarter net profit to 13 billion ringgit, mainly due to higher oil prices.
Brent crude oil prices are hovering around $77 per barrel, compared with an average of $57 in 2017, and that is prompting companies like Sapura Energy to tap the equities market and ride investors’ enthusiasm for the sector.
The country’s newly appointed Prime Minister Mahathir Mohamad told The Wall Street Journal last month that his government wouldn’t rule out the possibility of listing Petronas on the local stock exchange.
Sapura Energy, which counts Malaysian state funds Permodalan Nasional Bhd. and Kumpulan Wang Persaraan or KWAP among its shareholders, is looking at a valuation of between 5 billion to 7 billion ringgit for the exploration and production business, the people said.
Listing its profitable exploration and production unit, which accounted for nearly 30% of the group’s operating profit during the fiscal year ended January, will also help Sapura pare down its debt, the people said.