1. INTRODUCTION

The Board of Directors of SapuraKencana Petroleum Berhad (“SKPB” or the “Company”) (“Board”) is pleased to announce that SK Services has on 5 February 2014 entered into a joint-venture agreement ("JVA") with GE in relation to the JVC. 

SK Services and GE collectively referred to as "the Parties”.

2. DETAILS OF THE JOINT VENTURE

The purpose of the JVA is for the Parties to work together for the provision of after-sale services of rotating oil and gas equipment that GE’s Oil and Gas business division has sold or will sell to its customers, and such other business as the shareholders of the JVC may from time to time agree (“Business”).

3. SALIENT TERMS OF THE JOINT-VENTURE AGREEMENT

3.1 The authorized capital of the JVC is RM100,000. SK Services and GE each subscribe 51,000 ordinary shares and 49,000 ordinary shares of JVC, representing 51% and 49%, respectively.

3.2 The JVA is conditional upon the following conditions being fulfilled or waived:-

(a) the warranties given by GE and SK Services being true and accurate in all material respects, as at the date of Completion;

(b) JVC being granted a license from PETRONAS pursuant to the Petroleum Regulation 1974 to provide manpower, materials, consumables, equipment and facilities necessary for the maintenance, repair, overhaul, refurbishment and performance test of gas turbines and auxiliaries under PETRONAS’ Standardised Work & Equipment Category;

(c) no injunction, writ, restraining order or other order of non-consummation issued, and no proceedings or lawsuit having been commenced, by any Governmental Entity; and

(d) the ancillary agreements to be entered by the JVC with either GE and SK Services being in the agreed form.

The Parties shall work to ensure that the conditions precedents in the JVA are satisfied no later than 31 March 2014 (subject to any further extension agreed in writing by the Parties) at which time completion shall take place.

3.3 The JVA would require the JVC to acquire the assets and operations (including transfer of certain employees) from Malaysian Advanced Refurbishment Services Sdn Bhd (“MARS”), a subsidiary of SKPB, via an asset transfer agreement dated 5 February 2014, for the purpose of the operation of the Business of JVC.

3.4 The JVA shall remain in full force and effect unless and until terminated in accordance with its terms and conditions.

4. RATIONALE FOR ENTERING INTO THE JVA

The JVA was entered into for the purpose of outlining the relationship and the cooperation between GE and SK Services in the management and dealing in the affairs of the JVC.

5. RISKS

The risks related to the transactions in connection with the JVA are typical to any commercial contracts. These include breaches or non-performance of JVA or other obligations under the JVA.

6. FINANCIAL EFFECTS

The above joint venture is not expected to have any material effect on SKPB group’s earnings, net assets, share capital and substantial shareholdings of SKPB for the financial year ending 31 January 2015.

7. INFORMATION ON SK SERVICES

SK Services is a limited liability company incorporated in Malaysia. It is a wholly-owned subsidiary of Sapura Energy Sdn Bhd (“SE”) and in turn is a wholly-owned subsidiary of SKPB. Its place of business is at No. 24, Jalan Sepadu 25/123, Taman Perindustrian Axis, Seksyen 25, 40400 Shah Alam, Selangor Darul Ehsan, Malaysia.

SK Services was acquired on 30 December 2013 by SE by subscribing to its 2 ordinary shares of RM1.00 par value each (100%) as an intermediate holding company for the purpose of the JVA.

8. INFORMATION ON GE

GE is a limited liability company incorporated in Malaysia and having its place of business at Level 6 & 7, 1 Sentral, Jalan Travers, Kuala Lumpur Sentral 50470 Kuala Lumpur. GE operates as a services provider for the oil & gas and power industry in Malaysia. GE is a subsidiary of GE Pacific Private Limited.

9. DIRECTORS AND MAJOR SHAREHOLDERS’ INTEREST

None of the Directors and/or major shareholders of the Company or persons connected with them have any interest, direct or indirect, in the above joint venture.

This announcement is dated  7 February 2014.