Ezra shares sink over 30% after hefty writedown

File photo of Ezra Holdings' subsea construction vessel Lewek Constellation.
File photo of Ezra Holdings' subsea construction vessel Lewek Constellation.PHOTO: EZRA HOLDINGS

SINGAPORE - Ezra Holdings shares plunged on Monday morning (Feb 6) to a record low, reflecting market fears around the oil and gas firm's future amid its huge debt and massive writedown.

Ezra dropped over 30 per cent by 11am to 3.2 Singapore cents, with around 190 million shares transacted, over six times its 30-day average volume and making it the most heavily-traded stock.

Some measure of selloff was expected for the counter as it resumed trading on Monday, after Ezra's announcement last Friday that it may have to write down US$170 million (S$239.3 million) tied to the investment in its 40-per cent joint venture Emas Chiyoda Subsea.

Ezra also reiterated that it may face a going concern issue - a term that broadly implies threat of liquidation - if it can't restructure its businesses and balance sheet in time. The company's net current liability position for the financial year ended Aug 31 2016 was US$887.2 million.

Ezra is among the group of local oil and gas firms closely being watched for financial troubles as the industry continues to struggle amid low oil price environment.

And even as oil prices have regained some ground - with the crude oil benchmark Brent futures having risen over 65 per cent in the past 12 months to about US$56 - their immediate outlook remains shrouded in uncertainty.

Late last month, Keppel Corp reported a 65 per cent year-on-year drop in its fourth quarter earnings, which were dragged down by provisions made for the impairment affecting its offshore and marine operations.