Sapura Energy – turning around?

[i4value]

Crude oil prices are cyclical and if the revenue oil & gas companies are closely linked to crude oil prices, we can use crude oil prices as an indicator of its performance.

Take the example of Sapura Energy. When I looked at the past 10 years correlation between its revenue and Brent oil price for the same year, I found that there was a negative 0.31 correlation. Refer to the top chart.



But when I offset the revenue (eg by comparing the 2015 revenue with the 2013 Brent oil price and so on), the correlation was 0.85. This meant that changes in Brent oil prices explained almost ¾ of Sapura Energy revenue 2 years later. Refer to the bottom chart.

In other words, Sapura Energy 2023 performance was linked to the 2021 Brent oil prices and so on.

We know that Brent prices in 2022 and 2023 were higher than that for 2021. Does the correlation meant that in 2024 and 2025, we will see higher revenue for Sapura Energy?

If so, will this mean that we will see a turnaround for the company? Can we use the same analysis for other Bursa energy companies?