Sumatec submits regularisation plan (1201)

KUALA LUMPUR: Sumatec Resources Bhd, a PN17 company, has submitted a business regularisation plan to Bursa Malaysia for approval.
The
regularisation plan, once approved and implemented, will see Sumatec
onto stronger financial footing via the Joint Investment Agreement
(JIA) with Markmore Energy (Labuan)Ltd and CaspiOilGas LLP for the commercial development and production of the Rakushechnoye oil and gas field in Kazakhstan.
In
a statement, Sumatec said via its regularisation plan it would raise at
least RM452mil in cash from new share issuance and rights issue. “The
cash will be used for its obligations under the JIA as well as for
working capital.”
Sumatec said it had recently announced its disposal of the Semua International Sdn Bhd
and its subsidiaries. “With the disposable of Semua, combined with the
completion of the regularisation plan, all Sumatec’s debts will be
eliminated from its balance sheet, enabling Sumatec to start fresh on
the upstream oil and gas business without any legacy issues,” it said.
“The
board and management of Sumatec strongly feel that the Semua group has
to be disposed so that its performance after the proposed
regularisation exercise will not be negatively affected.”
The
company said in preparation for the new business, Sumatec had appointed
Chris Dalton as chief executive officer, who is currently revamping and
enhancing Sumatec’s capabilities to undertake the oil and gas
production at the Rakushechnoye oil field.
Additionally, Sumatec is also planning to appoint new directors to lead the company upon completion of its regularisation plan.
On
the prospect of the Rakushechnoye oil field, Sumatec said the JIA had
given Sumatec direct access to oil reserve and gas resource of up to
331 million barrels of oil equivalent.
“This marks the start of a direct correlation between Sumatec’s future profit and the world oil price.
“The
entry cost for Sumatec into the Rakushechnoye oil field is very low,
considering the reserves volume. Under the JIA, Sumatec will be paying
a non-refundable consideration of US$95mil, which is less than 60 US
cents per barrel of oil equivalent of oil and gas reserves.
“However,
the returns that Sumatec is expected to gain will be more than US$20
per barrel, depending on the oil price,” the company said.
Sumatec
said it was expected to generate large profits from oil and gas
production from the Rakushechnoye oil field. It said the oil production
was targeted to be increased to an average 2,000 barrels per day (bpd)
within the first 12 months followed by a ramp-up to 6,000 bpd by the
second year and 8,000 bpd by the third year.
The plateau oil
production of more than 9,000 bpd will be reached on the fourth year
and will last for six to seven years before the production starts to
gradually decline.
“At the same time, Sumatec is also expected
to produce natural gas (17 billion cu ft per year) from the
Rakushechnoye Field starting from the third year of operations.
CaspiOilGas, Markmore and Sumatec are now in discussions with several
potential gas buyers, including a gas-fired power plant in Aktau (120km
from the field),” it said.