INTRODUCTION
The Board of Directors of SapuraKencana Petroleum Berhad (“SapuraKencana” or "Company") is pleased to announce that pursuant to a public tender exercise, Sapura Navegação Marítima S.A., Brazil (“SNM”), a jointly controlled entity between TL Offshore Sdn Bhd (“TLO”), a wholly-owned subsidiary of SapuraKencana and Seabras Serviços De Petroleo S.A., a subsidiary of Seadrill Limited has received notification from Petróleo Brasileiro S.A. (“Petrobras”) that SNM has been awarded contracts to charter and operate three (3) units of Pipe Laying Support Vessels (“PLSV”) at total award value of approximately USD2.7 billion (“the Award”).
Petrobras is a publicly traded corporation, the majority stockholder of which is the Government of Brazil, and they are an integrated energy company in the following sectors: exploration and production, refining, oil and natural gas trade and transportation, petrochemicals and derivatives, electric energy, biofuel and other renewable energy source distribution with a presence in 28 countries.
INFORMATION ON THE CONTRACT
The contracts are for a period of eight (8) years with extension option for additional eight (8) years and are expected to commence by the second quarter of 2016. The three (3) PLSVs will be constructed outside Brazil.
FINANCIAL EFFECTS
Revenue from the Award is expected to be generated by the second (2nd) quarter of 2016. The Award will have no effect on the issued and paid-up share capital of the Company and is expected to contribute positively to the SapuraKencana Group's net assets and earnings for the financial year ending 31 January 2017 and beyond.
RISK FACTORS
The risks associated with the Award would be customary project risks during the construction of the PLSVs and performance of offshore works including maintaining safety and health. There would also be sovereign risk as the marine construction works would be performed in Brazil. However, SNM has in place procedures and processes which are of international standards to address and manage these risks.
DIRECTORS AND MAJOR SHAREHOLDERS' INTEREST
None of the directors and/or substantial shareholders of the Company and/or persons connected with them have any interest, whether direct or indirect, in the Award.
DIRECTORS' STATEMENT
The Board of Directors of the Company is of the opinion that the acceptance of the Award is in the best interest of the Company.
This announcement is dated 27 June 2013.