DNeX buys into upstream oil and gas firm

by **Cals** Mon 07 Sep 2015, 22:17

DNeX buys into upstream oil and gas firm

By Chen Shaua Fui / theedgemarkets.com | September 7, 2015 : 7:42 PM MYT

KUALA LUMPUR (Sept 7): E-commerce services provider [size=16]Dagang NeXchange Bhd (DNeX), through wholly-owned subsidiary DNeX Petroleum Sdn Bhd, is acquiring a 30% equity of Ping Petroleum Ltd, an independent upstream company that focuses on shallow water offshore production.

The acquisition is a key milestone in DNeX’s diversification into oil, gas and energy sector announced last year, and will be fulfilled at a cost of US$10 million to be funded by internal and borrowed funds, according to a statement today.

The announcement came in a time when the global crude oil price has tumbled from the peak of US$100 to around US$50 per barrel now.

Through the acquisition, DNeX said it is tapping into reserves and resources of Ping's recent agreement for the acquisition of the Anasuria Cluster.

Ping and Hibiscus Petroleum Bhd ([You must be registered and logged in to see this image.] Valuation: 0.30, Fundamental: 1.55) have jointly entered into sale and purchase agreements to each acquire 50% of the entire interests of Shell U.K. Ltd, Shell EP Offshore Ventures Limited and Esso Exploration and Production UK Ltd in the Anasuria Cluster of oil and gas fields effective from Jan 1, 2015.

DNex said the Anasuria Cluster is located about 175km east of Aberdeen in the UK Central North Sea and the joint acquisition comprises a 100% interest in the Anasuria FPSO, Teal, Teal South, Guillemot A fields and a 38.65% interest in the Cook field.

The cluster represents an attractive, geographically focused package of operated interests in producing fields and associated infrastructure, it added.

“The assets have a proven and producing resource base that provides a platform for further development. Moreover, a number of incremental development and exploration opportunities exist within the licenced areas, which are expected to generate incremental value in the medium term,” it added.

“The acquisition serves as part of critical building blocks to develop our diversification into oil, gas and energy in our journey to become a serious player in this sector. This asset is already on production and there are potential opportunities in terms of cost reduction, uptime improvement and future reserves development.

“It is expected to contribute positively to DNeX’s future earnings that will propel profitable growth for the Group, improve earning resiliency and enhance shareholders' value,” said DNex group managing director Zainal Abidin Jalil.

He added that DNeX’s diversification into oil, gas and energy has also borne early achievements by starting to register revenue in the second quarter this year through rental of drilling equipment to Baker Hughes (Malaysia) Sdn Bhd.

Also in the pipeline is the completion of the group’s proposed acquisition of OGPC Group, which is expected in fourth quarter 2015, DNex said.

DNeX has also acquired a 51% stake of Forward Energy Sdn Bhd, a company involved in power plant, energy, energy-related business specifically in the area of Independent Power Producer.

Shares in DNeX closed 0.5 sen or 2.17% lower at 22.5 sen, for a market capitalisation of RM178.3 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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