MARC has extended its MARCWatch Developing placement in respect of Bayu Padu Sdn Bhd’s (“Bayu Padu”) ratings of A+ID/MARC-1ID on its RM500 million Istisna’ Serial Bonds and RM100 million Murabahah Commercial Papers/Medium Term Notes (MCPs/MMTNs).

Bayu Padu, which is 100% owned by Sapuracrest Petroleum Berhad (“SapuraCrest”), is a special purpose vehicle (“SPV”) incorporated for the purpose of issuing of the Istisna’ Bonds and MCP/MMTNs, the proceeds of which are intended for utilization by the SapuraCrest group of companies.

The Company has redeemed RM250 million of the Istisna’ Bonds and the MCP/MMTNs of RM100 million nominal value on 8 December 2006. Currently, RM250 million of the Istisna’ Bonds remains outstanding.

MARC placed Bayu Padu on MARCWatch Developing in December 2006, following Sapuracrest’s announcement of a RM19.6 million pre-tax loss for the third quarter ended 31 October 2006. Its pre-tax profit for the nine month period ended 31 October 2006 declined to RM21.3 million, compared to RM88.6 million in the corresponding nine months of the preceding year. SapuraCrest’s installation of pipelines and facilities (“IPF”) segment had posted a pre-tax loss of RM45 million due to an escalation in costs which had resulted from bad weather conditions and locked in revenue rates and costs under a number of contracts with the company’s IPF customers. These rates and costs were locked in 2003 when fuel and other related costs were at much lower levels compared to current year levels. Notwithstanding, SapuraCrest had indicated that these IPF contracts were due to expire by the end of 2006, and that the Company was in talks to replace them with extensions or new contract orders at more favorable terms and conditions.

MARC will resolve the MARCWatch placement as soon as SapuraCrest’s full year results for 2006 and information on the outcome of new contract negotiations becomes available.