Is Puncak Niaga exiting O&G business?
Published on: Saturday, February 13, 2016
PETALING JAYA: Puncak Niaga Holdings Bhd, fresh from the sale of its Selangor water assets, looks to be exiting the oil and gas business as well, with the closure of its main oil and gas services subsidiary GOM Resources Sdn Bhd by the end of this month, according to sources.GOM Resources offers pipeline construction, platform installation and removal, construction support services, diving services, and marine support services to the offshore oil and gas industry.As at Jan 22, 2016, KGL Ltd, another subsidiary of Puncak Oil & Gas Sdn Bhd (POG), is listed as a Labuan leasing company.
ADVERTISEMENT
No further information was immediately available.According to sources, GOM Resources is currently running on a skeleton staff, after most of the company's more than 100 employees were given a choice of either being absorbed into the group or leave, with what was said to be a generous severance package.The only two departments still operating out of Etiqa Twin Towers till month's end are human resource and finance.It is unclear whether the move marks the end of the group's aspirations for its oil and gas business, which was initially positioned for further development.
ADVERTISEMENT
It was widely reported that Puncak Niaga had earmarked about RM1 billion of its water assets sale proceeds to fund either its further expansion into the oil and gas business or a venture into oil palm plantation. Requests for comment from both Puncak Niaga executive vice-chairman Tan Sri Rozali Ismail as well as Puncak Niaga managing director and GOM Resources CEO Datuk Syed Hisham Syed Wazir were not answered.Syed Hisham, who helmed UMW Holdings Bhd as president and CEO for five years, joined GOM Resources on Nov 2, 2015 and became Puncak Niaga managing director on Nov 6, 2015.
ADVERTISEMENT
One source close to the matter said management cited the lack of contracts in hand and the extended oil price rout as a reason for the company to shut down. He explained that GOM Resources has not won a major contract in the last two years. The last major contract by Petronas was awarded in December 2013.Puncak Niaga's oil and gas segment recorded a loss before interest and tax of RM37.9 million for the nine-month period ended Sept 30, 2015.For the financial quarter ended Sept 30, 2015, the oil and gas segment of Puncak Niaga recorded a loss before interest and tax of RM17.9 million compared with a profit before interest and tax of RM7.5 million reported in the preceding year's corresponding financial quarter, representing a negative variance of RM25.4 million or 338.7 per cent.The group told Bursa Malaysia in its quarterly results announcement that the dismal performance was due to lower revenue as a result of the downturn in the oil and gas sector.Oil and gas construction revenue for the nine-month period was down to RM59.1 million, from RM314.3 million for the same period in 2014.The latest development comes just five years after the group entered the oil and gas segment.In June 2011, Puncak Niaga's wholly owned subsidiary, POG, bought a 40 per cent equity interest in two oil and gas entities, namely GOM Resources and KGL, which came with proven track records in undertaking oil and gas works for Petronas, which enabled Puncak Niaga to make further forays and strengthen its presence as a significant company in the oil and gas industry.Stay up-to-date by following Daily Express’s Telegram channel.
Daily Express Malaysia
