Petronas plans to raise debt after posting quarterly loss

KUALA LUMPUR, Malaysia (Bloomberg) -- Petroliam Nasional Bhd., Malaysia’s state oil company, said it may need to raise debt and use its cash reserves for capital expenditure and to fulfill dividend payments to the government as it foresees another challenging year.

The company reported its third loss in five quarters as a slump in oil curbed revenue. The net loss was 4.7 billion ringgit ($1.1 billion) in the three months through December, compared with a loss of 9.9 billion ringgit a year ago, the company said Monday. Revenue fell 24% to 60.1 billion ringgit.

“As difficult as 2015 has been for us, the next two years will continue to be challenging," CEO Wan Zulkiflee Wan Ariffin told reporters in Kuala Lumpur. The company’s cash flow from operations is unlikely to be able to cover capex requirements as well as 16 billion ringgit in dividend payments to the government this year. "We will utilize our cash reserves and we may need to raise some borrowings," he said.

Petronas, as the company is known, joins global oil majors including Royal Dutch Shell Plc. in cutting spending as the industry contends with the worst crude downturn in 30 years. It is targeting to cut capital and operating expenditures by as much as 20 billion ringgit in 2016, with a planned reduction of 50 billion ringgit over four years, the CEO said Monday.

The company has started reviewing the positions of contract workers who aren’t critical to its core business and is expected to make announcements on cost-cutting steps in March, the Edge newspaper reported earlier this month.

Wan Zulkiflee said he will make an announcement on a new organizational structure this week, without giving details. The company had completed a review of its business operating model to boost efficiency levels, he said.