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EMPOWERINGOUR HUMANCAPITALEngineering & Construction // Drilling // EnergyANNUAL REPORT 2016

GLOBAL PRESENCEOur LocationsEngineeringGeotechnical/Geophysical SurveyOperations &MaintenancesFabricationHook-up &CommissioningUSAHoustonInstallation ofPipelines & FacilitiesGulf of MexicoCubaMexicoMarine, Diving &ROV ServicesCiudaddel CarmenColombiaTrinidad and TobagoPort of SpainVenezuelaGuyanaDrillingExploration &ProductionENGINEERING &CONSTRUCTIONBrazilRio de JaneiroDRILLINGENERGY

umbaiChinaDongguanYangonHong KongBangkokSouthSudanVung TauLumutKuala iJakartaTimor SeaPapua NewGuineaMadagascarAustraliaPerthSOUTHEAST ASIABass Strait MalaysiaSingaporeIndonesiaBrunei New ZealandThailandPhilippinesVietnamMyanmar

ANNUAL REPORT 2016CORPORATE OVERVIEWAT A GLANCEOUR VALUE ECOMMISSIONING& ABANDONMENTProduction SharingContract on,Installation,Commissioning,Drilling, ProductionSharing ContractBlock DevelopmentProductionSharing ContractBlock Production,Marginal IC ASSETS SUPPORTING OPERATIONS*ENGINEERING &CONSTRUCTION 273-acre Fabrication Yard in Lumut 20-acre Fabrication Yard in TelukKalong 6 Derrick Lay Vessels 6 Pipelaying Support Vessels 1 Subsea Construction Vessel 42 Remotely Operated Vehicles 2 Geophysical Survey Vessels 2 Geotechnical Survey Vessels 5 Diving Support Vessels 4 Anchor Handling Tug Supply Vessels 1 Floatover Launch Barge 6 Accommodation Boats & BargesDRILLING 9 Tender Barge Rigs 8 Semi-Tender Rigs* Other assets include Turbine Maintenance Centre and 88-acre Shipyard in Labuan2SAPURAKENCANA PETROLEUM BERHADENERGY Participation in 9 ProductionSharing Contracts Participation in 1 Risk ServiceContract Operatorship in 6 ProductionSharing Contracts

CONTENTSAbout SapuraKencana Petroleum Berhad5Our Vision5Health, Safety and Environment6Financial Performance8Financial Calendar5About SapuraKencanaPetroleum Berhadpage12Message to Shareholders10Message to Shareholders12President & Group CEO’s Review16Profiles of Board of Directors20Executive Committee30BUSINESS OVERVIEW32Engineering & Construction - International38Drilling46Energy52Corporate Responsibility58Highlights of Events66CORPORATE GOVERNANCEpage16President & Group CEO’s Reviewpage32Business Overview58Corporate ResponsibilityFINANCIALSTATEMENTSpage68Statement on Corporate GovernanceSHAREHOLDERSINFORMATION79Statement on Risk Managementand Internal Control82Additional Compliance Information84Statement on Directors’ Responsibility85FINANCIAL STATEMENTSDirectors’ Report87Statement by Directors92Statutory Declaration92Independent Auditors’ Report93Consolidated and SeparateIncome Statements95Consolidated and Separate Statementsof Comprehensive Income96Consolidated and SeparateStatements of Financial Position97Consolidated Statement of Changes in Equity99Company Statement of Changes in Equity100Consolidated Statement of Cash Flows101Company Statement of Cash Flows103Notes to the Financial Statements104Supplementary Information– Breakdown of Retained Profitsinto Realised and Unrealised226Analysis of Shareholdings227FIFTH ANNUAL GENERAL MEETINGpage96Consolidated and SeparateStatements of Comprehensive Incomepage227Analysis of ShareholdingsNotice of Annual General Meeting231Statement Accompanying Notice ofAnnual General Meeting234Proxy FormFIFTH ANNUAL GENERAL MEETINGSHAREHOLDERS INFORMATIONSHAREHOLDERS INFORMATIONpage68Report of Audit CommitteeFINANCIAL STATEMENTSCORPORATEGOVERNANCEStatement on Corporate GovernanceCORPORATE GOVERNANCEEngineering & Construction - MalaysiaBUSINESS OVERVIEWpage9Corporate InformationCORPORATE OVERVIEWCORPORATE OVERVIEW

ANNUAL REPORT 2016CORPORATE OVERVIEW4SAPURAKENCANA PETROLEUM BERHAD

ANNUAL REPORT 2016CORPORATE ana”or “Group”) is a leading globalintegrated oil and gas services andsolutions provider, working acrossthe entire upstream value chain.The Group operates globally, witha workforce of highly skilled andtechnically capable multinationals,strategicworld-classassetsand strong project managementcapabilities.SapuraKencana has also establisheditself as a key Exploration andProduction player recognised forits cost effectiveness and excellentsafety standards. The Group willremain focused on enhancingoperational efficiency to provideclients with the most cost-effective,safe and innovative solution.SapuraKencanaiscommittedto providing solutions for theincreasingly complex and rapidlyevolving requirements of the globaloil and gas industry.OUR VISIONOur Vision is to be the best entrepreneurially led, technically competent and most trusted global oil and gas company inthe eyes of our customers, shareholders and most importantly, our empowered people.We will be guided by our honesty, trust and respect for all. We will achieve our business objectives by being safe, agile andprofessional to continuously strive to meet all of our stakeholders’ expectations.THE PEOPLE OFSAPURAKENCANA PETROLEUMSAPURAKENCANA PETROLEUM BERHAD5CORPORATE OVERVIEWABOUTSAPURAKENCANAPETROLEUM BERHAD

ANNUAL REPORT 2016CORPORATE OVERVIEWHEALTH, SAFETYAND ENVIRONMENTHigh standards of Health,SafetyandEnvironment(“HSE”) have always been acore element to our operationsat SapuraKencana. We remaindeeply committed to ourcompany’s vision of beingsafe, agile and professional,whilst actively managing riskswithin all aspects of our dailyoperations. We operate withintegrity, and our partnershipwith all stakeholders isfocused on prioritising thehealth and safety of ouremployees and the protectionof the environment in whichwe operate.Risks are to be expected in our industry.With this in mind, SapuraKencana has inplace a robust and comprehensive riskmanagement system to identify, mitigateand manage such potential risks. This HSEculture, essentially our way of life, is firmlyembedded at every level throughout ourorganisation.Every individual in the Group is responsiblefor upholding our HSE policies. Everyemployee and contractor is empowered andrequired by our Stop Work Policy to intervenewhen unsafe behaviours or conditions areobserved.Our strong experience in the oil and gassector as well as our collaboration withindustry and government stakeholders haveled to the sharing and adopting of HSE bestpractices in our business. We consistentlykeep abreast of HSE developments in theindustry and drive continuous improvementin our organisation.6SAPURAKENCANA PETROLEUM BERHADThe people ofSapuraKencana arecommitted to activelymanaging risk in all aspectsof our daily operations.

ANNUAL REPORT 2016CORPORATE OVERVIEWWe are honoured to have been accorded the following awards and milestone recognitions by our clients for our various HSEachievements:RecipientAchievementAwarding CompanySapuraKencana HL Sdn Bhd1.5 million manhours without lost time injury (“LTI”) for the CPOC Phase 3Carigali-PTTEPI Operating CompanyDevelopment Project on QHSE DaySdn Bhd800,000 manhours without LTI, Celebration of Manifold Fabrication Site Safety DayFMC Technologies Singapore Pte LtdSapuraKencana HL Sdn Bhdfor the Shell Prelude ProjectSapuraKencana HL Sdn Bhd600,000 manhours without LTI (QHSE) for the Angsi ProjectPETRONAS Carigali Sdn BhdSapuraKencana HL Sdn Bhd1.5 million manhours without LTI for the EPCIC of RWHPHESS CorporationSapuraKencana HL Sdn Bhd500,000 manhours without LTI for the EPCC Tukau BaroniaPETRONAS Carigali Sdn BhdSapuraKencana HL Sdn BhdAppreciation Award for Amarit-A (AMA) & Muda-F (MDF) Wellhead Platform PhaseCarigali-PTTEPI Operating Company3 Development ProjectSdn BhdSapuraKencana HL Sdn Bhd15.0 million manhours without LTI for the Wheatstone Project ISBL LNG PlantBechtel Oil, Gas & Chemicals, IncSapuraKencana HL Sdn Bhd250,000 manhours without LTI for the Shell Prelude ProjectFMC Technologies Singapore Pte LtdSapuraKencana HL Sdn Bhd500,000 manhours without LTI for the Apache Julimar ProjectGE Oil & Gas NorwaySapuraKencana HL Sdn Bhd600,000 manhours without LTI for the Ichthys ProjectGE Oil & Gas NorwaySapuraKencana HL Sdn Bhd300,000 manhours without LTI for the EPCIC of JDA Gas Evacuation (EVA) ProjectPETRONAS Carigali Sdn BhdSapuraKencana HL Sdn Bhd500,000 manhours without LTI for the EPCIC of JDA EVA ProjectTrans Thai-Malaysia (Malaysia) Sdn BhdSapuraKencana Allied Marine Sdn BhdCertificate of Appreciation of Support and Services Towards the Safe and TimelySapuraAcergy Sdn BhdCompletion of the GUMUSUT-KAKAP ProjectSapuraKencana TL Offshore Sdn BhdImplementer of P&E Strategy No. 8 Award (Strengthen HSE Performance)PETRONAS Carigali Sdn BhdSapuraKencana Pinewell Sdn Bhd1.8 million manhours without LTI for the Samarang Phase II ProjectPETRONAS Carigali Sdn BhdSapuraKencana Drilling Pte LtdRig of the Year 2015 for SKD EsperanzaHESS CorporationSapuraKencana Drilling Pte LtdSKD’s Songkhla supply base recognised for Zero Non-Conformance to PLEChevron ThailandStandardSapuraKencana Drilling Pte LtdSKD T-12 and SKD T-18 recognised as Outstanding RigsChevron ThailandSapuraKencana Drilling Pte Ltd7 years without LTI for SKD SetiaCabinda Gulf Oil CompanySapuraKencana Drilling Pte Ltd11 years without LTI for SKD PelautBrunei Shell PetroleumSapuraKencana Drilling Pte LtdBest Performing Rig of the Year 2015 (Platform Rig Category) for SKD PelautShell WorldwideSapuraKencana Drilling Pte Ltd5 years without LTI for SKD T-12Chevron ThailandSapuraKencana Drilling Pte Ltd600,000 manhours without LTI for the Tapis C HUC and Topside MajorExxonMobil Exploration and ProductionMaintenance ServicesMalaysia Inc.OHSAS 18001:2007ISO 9001:2008ISO 14001:2004 SapuraKencana TL Offshore Sdn Bhd SapuraKencana TL Offshore Sdn Bhd SapuraKencana TL Offshore Sdn Bhd SapuraKencana Allied Marine Sdn Bhd SapuraKencana Allied Marine Sdn Bhd SapuraKencana Allied Marine Sdn Bhd SapuraKencana Australia Pty Ltd SapuraKencana HL Sdn Bhd SapuraKencana HL Sdn Bhd Total Marine Technology Pty Ltd Total Marine Technology Pty Ltd Total Marine Technology Pty Ltd SapuraKencana GeoSciences Sdn Bhd SapuraAcergy Sdn Bhd SapuraAcergy Sdn Bhd SapuraKencana Technology Sdn Bhd NZ 4801 SapuraAcergy Sdn BhdSapuraKencana Allied Marine Sdn Bhd MS 1722SapuraKencana TL Offshore Sdn BhdSAPURAKENCANA PETROLEUM BERHAD7CORPORATE OVERVIEWHEALTH, SAFETYAND ENVIRONMENT

ANNUAL REPORT 2016CORPORATE OVERVIEWFINANCIALPERFORMANCEREVENUEFY13FY15(RM’ 00050000 2%vs FY15FY13FY15(RM’ MILLION) 6%vs FY1582,059FY13FY15Excludes provision for impairment in FY2015 and FY2016 and one off item in FY2016.SAPURAKENCANA PETROLEUM BERHAD10,0008,0006,0004,0002,0000 2%vs 30,00001%(RM’ MILLION)35,0005,000-vs FY15TOTAL 2,50010,1846,0006,9128,0008,37910,0009,943(RM’ MILLION)FY14FY16

ANNUAL REPORT 2016CORPORATE OVERVIEW201524 MARCHAnnouncement of theunaudited consolidatedresults for the fourthquarter ended 31 January201515 APRILSubmission of AuditedFinancial Statements forthe financial year ended31 January 201515 SEPTEMBER15 JUNE16 JUNEAnnouncement of theunaudited consolidatedresults for the first quarterended 30 April 2015Fourth AnnualGeneral Meeting22 DECEMBERAnnouncement of the unaudited consolidated results forthe second quarter ended 31 July 2015Announcement of the unaudited consolidated results forthe third quarter ended 31 October 2015201625 MARCHAnnouncement of theunaudited consolidatedresults for the fourthquarter ended 31 January201620 MAYSubmission of AuditedFinancial Statements forthe financial year ended31 January 201626 MAYNotice of Annual GeneralMeeting and issuanceof Annual Report for thefinancial year ended31 January 201626 JULYFifth Annual GeneralMeetingSAPURAKENCANA PETROLEUM BERHAD9CORPORATE OVERVIEWFINANCIALCALENDAR

ANNUAL REPORT 2016CORPORATE OVERVIEWCORPORATEINFORMATIONBOARD OF DIRECTORSDATO’ HAMZAH BAKARChairman10TAN SRI DATO’ SERISHAHRIL SHAMSUDDINTAN SRI DATUK AMAR(DR) HAMID BUGOPresident andGroup Chief Executive OfficerNon-IndependentNon-Executive DirectorNon-Independent Executive DirectorSenior IndependentNon-Executive DirectorDATO’ SHAHRIMANSHAMSUDDINMOHAMED RASHDIMOHAMED GHAZALLIGEE SIEW YOONGNon-IndependentNon-Executive DirectorIndependentNon-Executive DirectorIndependentNon-Executive DirectorRAMLAN ABDUL MALEKDATUK MUHAMADNOOR HAMIDNon-IndependentExecutive DirectorIndependentNon-Executive DirectorSAPURAKENCANA PETROLEUM BERHAD

ANNUAL REPORT 2016CORPORATE OVERVIEWNOMINATIONCOMMITTEETan Sri Datuk Amar (Dr) Hamid BugoChairmanDato’ Hamzah BakarRISK COMMITTEEREGISTERED OFFICEMohamed Rashdi Mohamed GhazalliChairmanLevel 6, Menara SapuraKencana PetroleumSolaris Dutamas1, Jalan Dutamas 150480 Kuala Lumpur, MalaysiaTel: (6)03-6209 8000Fax : (6)03-6209 5744Dato’ Shahriman ShamsuddinDatuk Muhamad Noor HamidGee Siew YoongREMUNERATIONCOMMITTEEDato’ Hamzah BakarChairmanTan Sri Dato’ Seri Shahril ShamsuddinMohamed Rashdi Mohamed GhazalliLONG-TERM INCENTIVEPLAN COMMITTEEDato’ Hamzah BakarChairmanTan Sri Dato’ Seri Shahril ShamsuddinTan Sri Datuk Amar (Dr) Hamid BugoAUDIT COMMITTEEGee Siew YoongChairmanCOMPANY SECRETARYJasmin Abdul Rashid(LS 0009589)AUDITORSErnst & Young (AF: 0039)Chartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala Lumpur, MalaysiaTel: (6)03-7495 8000Fax : (6)03-2095 9076/9078SHARE REGISTRARSymphony Share Registrars Sdn BhdLevel 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan, MalaysiaTel: (6)03-7849 0777Fax : (6)03-7841 8151/8152STOCK EXCHANGELISTINGMain Market ofBursa Malaysia Securities Berhad(Listed on 17 May 2012)Stock Name : SKPETROStock Code : 5218PRINCIPAL BANKERSABN AMRO BankAmIslamic Bank BerhadCIMB Bank BerhadCitibankExport-Import Bank of Malaysia BerhadING BankMalayan Banking BerhadMizuho BankNational Bank of Abu DhabiRHB Bank BerhadStandard Chartered BankSumitomo Mitsui Banking CorporationThe Bank of Tokyo-Mitsubishi UFJ, LtdUnited Overseas BankTan Sri Datuk Amar (Dr) Hamid BugoMohamed Rashdi Mohamed GhazalliSAPURAKENCANA PETROLEUM BERHAD11CORPORATE OVERVIEWCORPORATEINFORMATION

ANNUAL REPORT 2016CORPORATE OVERVIEWMESSAGE TOSHAREHOLDERSDear Shareholders,On behalf of the Board of Directors (“Board”), I am pleased to presentto you the Annual Report and Audited Financial Statements forSapuraKencana Petroleum Berhad (“SapuraKencana” or “Group”) forthe financial year ended 31 January 2016 (“FY2016”).FY2016 has been a very challenging yearfor the global oil and gas industry driven bysustained low oil prices and reduced capitalspending. During the year, fewer projectswere tendered out, resulting in more intensecompetition. At the same time, existingclients expected costs to be significantlyreduced.Our Management had to adapt the Groupstrategies to face these challenges. Throughimproved cost management and increasedefficiencies, we were able to replenish theorder book and deliver projects to our clientson time and within budget.Such efforts have helped the Groupimprove its operational performance. Grouprevenues for FY2016 came to RM10.2billion, an increase of approximately 2%from the previous year. However, sustainedlow oil prices without significant signs ofa turnaround had reduced the number ofdrilling projects worldwide. At the same time,the valuation of our own oil and gas assetshad reduced in line with the low oil pricetrend. In accordance with prudent businesspractice, the Group had to impair the valueof some of its assets by about RM2.0 billion.Consequently, despite higher revenue andsignificant cost savings, the Group recordedan after tax loss of RM791.0 million. As at31 January 2016, our shareholders’ fundstood at RM12.2 billion with total assets ofRM36.5 billion.Among the more significant operationalsuccesses were the delivery of ysia-ThailandJointDevelopment Area, Indonesia, Vietnam,12SAPURAKENCANA PETROLEUM BERHADIndia and Mexico. The Energy divisionmet production targets and achievedsignificant cost reduction in theiroperations.Our operations continue to maintainhigh standards in Health, Safety andEnvironment (“HSE”) practices andreceived various recognitions fromour customers globally. These includeaccolades from Royal Dutch Shell Global,Hess Corporation and Chevron Thailand.In Drilling, SKD Pelaut achieved itseleventh year without a lost time injury(“LTI”). SKD Setia and SKD T-10 bothnotched their seventh year of being LTIfree. SapuraKencana Australia (“SKA”)notched up its fourth consecutive yearwithout LTI.All these notable operational achievementsare vital in this period of stiff competitionto win new work. The industry outlook isexpected to remain uncertain over the nextyear and the Board is in support of theproactive steps taken by the Managementto ensure that the Group is able to deliverits strategy, to aggressively rebase itscosts and ensure long-term sustainabilityof the business, fundamentally protectingand enhancing value for shareholders.A key component of the Group’s agendais investment in human capital. TheLong-Term Incentive Plan has now beenimplemented as a means to retain keytalents and capability for the Group. Otherkey initiatives such as succession planningand development in leadership andtechnical skills have been improved so thatthe Group will have the required expertiseand agility when the industry recovers.

ANNUAL REPORT 2016CORPORATE OVERVIEW“The Board is in support of the proactivesteps taken by the Management to ensurethat the Group is able to deliver its strategy, toaggressively rebase its costs and ensurelong-term sustainability of the business,fundamentally protecting and enhancing valuefor shareholders.”Dato’ Hamzah BakarChairmanNon-Independent Non-Executive DirectorSAPURAKENCANA PETROLEUM BERHAD13CORPORATE OVERVIEWMESSAGE TOSHAREHOLDERS

ANNUAL REPORT 2016CORPORATE OVERVIEWMESSAGE TOSHAREHOLDERSThe Board is committed to the higheststandards of corporate governanceandriskmanagementpracticesacross our operations. Continuedemphasis is placed on implementingstringent and transparent governancecontrols to safeguard the reputation ofSapuraKencana as well as to safeguardshareholder value.Giving back to the communities that weoperate in is the anchor for our CorporateResponsibility (“CR”) initiatives. This yearwe have been involved with YayasanPeneraju, a youth programme whichoffers financial support to studentsfrom low-income families as well as freetraining programmes in vocational andprofessional skills. We believe theseprogrammes are able to deliver longterm benefits to the local communitiesand contribute to Malaysia’s nationaldevelopment agenda.ACKNOWLEDGEMENTSOn behalf of the Board, I wish toexpress my most heartfelt appreciationto our many employees for theirtireless dedication, enthusiasm andprofessionalism during the year underreview.I would also like to commend thePresident and Group Chief ExecutiveOfficer and his management team fortheir drive, commitment and personalsacrifices in their efforts to ensure theGroup is able to emerge stronger in theface of current challenges. They hadreconfigured the Group’s strategies andstructure and successfully achievedhigher efficiencies in all the Groupactivities, resulting in cost savings ofapproximately RM0.5 billion during theyear. They led the Group by example.Theyshowedtheircommitmentto achieve cost savings by takingpersonal salary cuts during the year andcontinuing into the financial year ending31 January 2017 (“FY2017”).14SAPURAKENCANA PETROLEUM BERHADRMAchieved10.2billionRevenue

ANNUAL REPORT 2016CORPORATE OVERVIEWTotal assetsRM36.5billionWe have a strong Board, comprisingmembers with vast expertise andexperie

3 Development Project Carigali-PTTEPI Operating Company Sdn Bhd SapuraKencana HL Sdn Bhd 15.0 million manhours without LTI for the Wheatstone Project ISBL LNG Plant Bechtel Oil, Gas & Chemicals, Inc SapuraKencana HL Sdn Bhd 250,000 manhours without LTI for the Shell Prelude

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