Update UMW Oil & Gas buys drilling rigs for RM1.44b

by **Cals** Thu 13 Feb 2014, 01:39

Update UMW Oil & Gas buys drilling rigs for RM1.44b

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Wednesday, 12 February 2014 18:02

KUALA LUMPUR (Feb 12): UMW Oil & Gas Corp Bhd is buying two jack-up drilling rigs from China-based Tianjin Haiheng Shipbuilding & Offshore Engineering Service Co Ltd for US$434 million (RM1.44b) cash. The drilling rigs are priced at US$ 217 million each.

In a statement to Bursa Malaysia today, UMW Oil & Gas said it was buying more drilling rigs to capitalise on the expected increase in oil and gas exploration and production spending and activities in Malaysia and the Asia Pacific region this year.

"The agreement for the purchase of the two (2) jack-up drilling rigs is in line with UMWOG's (UMW Oil & Gas) plan to enhance the asset fleet for expansion in Malaysia and Asia Pacific region as well as to improve financial performance over the coming years.

"The rigs acquisition is expected to contribute positively to the earnings and net assets of the company for the financial years 2014 and thereafter," UMW Oil & Gas said.

The company which already owned four drilling rigs, said it hoped to own more to capitalise on strong demand for these items.

According to UMW Oil & Gas, its decision to buy more drilling rigs was also in line with its listing objective. The firm had earlier planned to use the listing proceeds to finance its capital expenditure for asset expansion.

"The purchase price will be funded partially from the proceeds of the recently completed initial public offering and the balance by borrowings," the firm said.

UMW Oil & Gas said it expected to receive both rigs from Tianjin Haiheng by this December.