BARAKAH OFFSHORE PETROLEUM BERHAD Q3 2025 Latest Quarterly Report Analysis

Greetings, fellow Malaysian retail investors!

Today, we’re diving into the latest financial report from Barakah Offshore Petroleum Berhad for the quarter ended 31 March 2025. This report provides a crucial look into the company’s performance, especially as it navigates a challenging period marked by significant operational shifts and critical regulatory deadlines. While the individual quarter shows a sharp decline in revenue, the cumulative nine-month results reveal a substantial turnaround in profitability, primarily driven by a successful litigation outcome. However, the pressing issue of its PN17 status looms large, with a potential delisting date fast approaching.

Let’s unpack the key figures and what they mean for Barakah’s journey ahead.

Financial Performance: A Tale of Two Periods

Barakah’s latest quarter, ending 31 March 2025, presents a stark picture of reduced operational activity. However, looking at the cumulative nine-month period, a different story emerges, largely influenced by a one-off gain.

Individual Quarter (3 Months Ended 31 March 2025 vs 31 March 2024)

The current quarter saw a dramatic 94% decrease in revenue compared to the same period last year. This significant drop was mainly due to a reduction in work carried out, stemming from contract closures towards the end of 2024 and the completion of Transportation & Installation (T&I) works in the preceding year.

Cumulative 9 Months (Ended 31 March 2025 vs 31 March 2024)

Despite the sharp quarterly decline, the cumulative nine-month period paints a much brighter picture for profitability. The Group reported a substantial profit before taxation of RM44.779 million, a remarkable turnaround from a loss of RM4.414 million in the preceding year. This significant improvement is primarily attributed to income from a successful adjudication claim, which saw the company receive RM78.817 million in August 2024.

Business Segment Performance (Cumulative 9 Months)

Let’s look at how each segment contributed to the revenue for the cumulative nine months:

The T&I segment recorded no revenue in the current period, as work for the SPM2 Replacement Project, which contributed to revenue in the preceding year, has been completed. The HUCM segment, while still the largest contributor, saw a 30% reduction in revenue due to contract closures. The “Others” segment, mainly driven by rental income from yards and facilities, showed a modest increase.

Financial Health: A Stronger Balance Sheet

The successful adjudication claim has had a positive ripple effect on Barakah’s financial position:

The significant increase in Total Equity and Net Asset Per Share reflects the improved profitability for the cumulative period. Cash and cash equivalents also saw a healthy boost, primarily from the cash generated from operating activities, which turned positive at RM34.840 million for the nine-month period, compared to a negative RM24.589 million in the prior year.

Risks and Prospects: Navigating Choppy Waters

The global oil and gas industry is undergoing a transformation, with a continued reliance on hydrocarbons despite the push for renewables. Malaysia’s sector, particularly, is expanding with ambitious targets from PETRONAS, offering opportunities for service providers like Barakah in offshore maintenance, engineering, and decommissioning.

Barakah aims to capitalize on these opportunities through securing new projects, enhancing operational efficiency, and stringent cost management. However, the company faces considerable challenges, including price volatility, intense competition, and regulatory compliance.

The Critical PN17 Status

The most pressing concern for Barakah is its PN17 status, which it triggered in May 2019. The company has submitted and revised regularisation plans multiple times. The latest update is critical:

• Bursa Securities rejected Barakah’s application for a further extension of time to submit its regularisation plan on 22 May 2025.
• Trading in Barakah’s securities will be **suspended with effect from 30 May 2025**.
• The company’s securities will be **de-listed on 4 June 2025**, unless an appeal against the de-listing is submitted to Bursa Securities on or before 29 May 2025.

Even if an appeal is submitted, the trading suspension will proceed on 30 May 2025, with the de-listing deferred pending the appeal decision. This situation presents an immediate and severe risk for shareholders.

Material Litigation Updates

Barakah is involved in several material litigations, with some significant developments:

• The arbitration with Petronas Gas Berhad (PGB) for a claim of approximately RM179.8 million has reached an amicable settlement, with a Final Consent Award signed on 20 February 2025. This is a positive resolution.
• The adjudication claim against Enquest Petroleum Production Malaysia Ltd (ENQUEST) for RM73.57 million was successful, with Barakah receiving RM78.817 million (including interest) in August 2024. This is the primary driver of the cumulative profit turnaround. While arbitration with ENQUEST is ongoing, the significant cash receipt is a major positive.
• However, the arbitration with Petrofac (Malaysia-PM304) Limited, concerning an alleged anchor dropping incident, resulted in the Tribunal allowing Petrofac’s claim of USD1.19 million against PBJV (Barakah’s subsidiary). Barakah is seeking to set aside this award and has an appeal hearing scheduled for 10 June 2025.

Summary and Outlook

As a Malaysian retail investor, what are your thoughts on Barakah’s current situation? Do you believe the company can successfully navigate its regulatory challenges and capitalize on the opportunities in the oil and gas sector? Share your insights in the comments below!