Mon 05/31/2021 00:00 AM
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Relevant Documents:
Q1FY’21 Consolidated Financial Statements
Q1FY’21 Presentation

PT Saka Energi Indonesia, an Indonesian upstream oil and gas company, reported today, May 31, its first quarter 2021 financials for the period ended March 31, posting a 39% year over year decline in revenue to $46.7 million, with though net loss for the period narrowed to $20.3 million from a loss of $26.5 million in the first quarter of 2020.  Continue reading for our Asia Core Credit team's reporting on PT Saka Energi, and request a trial to access legal and financial analysis of hundreds of other performing, stressed and distressed credits in the region. 

The financials further state that in relation to its $625 million 4.45% senior notes due 2024 that while the company is not required to make a sinking fund payment with respect to the bonds, it is planning to prepare a sinking fund in stages until the maturity date, confirming Reorg’s previous reporting.

A buyside source said the due 2024s were indicated at 88.75/ 89.75 this morning.

According to the investor presentation, the decline in revenue can be attributed to a decrease in lifting volumes in Pangkah PSC and Muara Bakau PSC, as well as Saka having “not obtained the Crude Oil lifting portion” from Ketapang PSC and thus only booking revenue from condensate and natural gas.

Reorg previously highlighted declines in lifting volume at Pangkah PSC, Muara Bakau PSC for the first quarter of 2021 HERE.

The presentation states that pursuant to the oil lifting schedule for Ketapang PSC, Saka’s entitlement will start in April 2021. Reorg had earlier reported a recovery in Ketapang PSC lifting volumes in April 2021.

The decline in revenues from Pangkah PSC, Muara Bakau PSC and Ketapang PSC was partially offset by a 67.2% year over year increase in revenue from Fasken due to an abnormally high Henry Hub spot price of $6 per million British thermal units (mmbtu) to $16 per mmbtu between Feb. 11 to Feb. 18, the presentation shows. This is likely related to the cold snap experienced in parts of the United States of America in February 2021.

The presentation shows that Saka’s average cash cost per barrel fell 32% year over year to $8.1 per barrel for the first quarter of 2021, which helped increase EBITDA margin to 60%, as compared to 58% for the first quarter of 2020.

The narrowing in Saka’s net loss was due to the company posting a tax benefit of $1.7 million in the first quarter of 2021, as compared to a $10.5 million tax expense in the first quarter of 2020, according to the financials.

Saka reported a cash balance of $161.8 million as of March 31, a decrease of $74.9 million from $236.8 million as of Dec. 31, 2020. The financials show that for the first quarter of 2021, the company generated operating cash flow of $24.9 million, incurred $22.7 million in capital expenditure and repaid $77.6 million of its shareholder loan owed to parent company Perusahaan Gas Negara Tbk (PGAS).

The investor presentation shows that Saka will, in the second quarter of 2021, begin discussions with PGAS to extend the maturity of the $360.7 million of shareholder loans that remains outstanding as of March 31. Saka previously stated in its December 2020 investor presentation that it was only looking to extend the maturity of the $283.1 million portion of the shareholder loans due on Jan. 1, 2022.

With respect to its $127.7 million tax dispute in relation to the company’s acquisition of Pangkah PSC through Saka Indonesia Pangkah Ltd (SIPL), the presentation states that Saka has “submitted prepared formal objection regarding the tax penalty” and is preparing to “submit the re-appeal to the Supreme Court for the principal tax amount”. Saka previously stated in its December 2020 investor presentation that the appeal to the Supreme Court “will take some time”.

Operational Highlights

The presentation shows that Saka’s average daily production for the first quarter of 2021 declined 12% year over year to 25.7 mboepd (thousand barrels of oil equivalent per day) - however, this is still in line with its full-year 2021 guidance of between 25 mboepd to 30 mboepd - due to natural depletion, a delay in operations at West Pangkah and a 18-day facility shutdown in Muara Bakau PSC in January 2021 due to “facility tying up with East Sepinggan Field”.

Muriah PSC resumed its gas production in February 2021 with an average daily rate of 15 mmscfd to 25 million standard cubic feet per day (mmscfd), which is being sold at a fixed price of $5.18/mmbtu to main offtaker, PT Perusahaan Listrik Negara (Persero), the presentation states.

Based on the presentation, 20% of the total full-year 2021 capital expenditure budget of $70 million to $80 million has been disbursed as of March 2021.

Regarding lifting volumes, the presentation shows that Saka’s total lifting in the first quarter of 2021 fell 29% year over year to 1.4 million barrels of oil equivalent. While oil lifting volume was low at Pangkah PSC and Ketapang PSC in the first quarter of 2021, lifting volumes are expected to increase in the second quarter of 2021 pursuant to Saka’s lifting schedule.

According to the presentation, Saka’s average selling price for crude oil and natural gas has recovered in the first quarter of 2021 on a year-on-year basis.

Saka’s capital structure is as follows:


 










































































































































Saka Energi Indonesia


03/31/2021

EBITDA Multiple

(USD in Millions)

Amount

Price

Mkt. Val.

Maturity

Rate

Yield

Book

Market


Saka $625mil 4.45% May'24 1

625.0

94.5

590.6

May-05-2024

4.450%

6.060%

Total Bonds

625.0

590.6

9.2x

8.7x

Shareholder's loan 2

360.7


360.7

Jan-2022

USD LIBOR + 2.000%


Total Loans

360.7

360.7

14.6x

14.1x

Total Debt

985.7

951.3

14.6x

14.1x

Less: Cash and Equivalents

(161.8)

(161.8)

Net Debt

823.9

789.5

12.2x

11.7x

Operating Metrics

LTM Reorg EBITDA

67.6


Liquidity

RCF Commitments

30.0

Plus: Cash and Equivalents

161.8

Total Liquidity

191.8

Credit Metrics

Gross Leverage

14.6x

Net Leverage

12.2x


Notes:
1. Negative pledge, no limitation on indebtedness
2. Repaid $77.6 mil in Jan'21; In discussions to extend maturity in Q2'21



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