Highlight Protasco’s O&G venture falls through

by **Cals** Thu 07 Aug 2014, 00:46

Highlight Protasco’s O&G venture falls through

Business & Markets 2014

Written by Shalini Kumar of theedgemalaysia.com

Wednesday, 06 August 2014 08:29

KUALA LUMPUR: Protasco Bhd has called off its venture into the onshore marginal oilfield development in Indonesia — one of the factors that had previously helped to fuel the company’s share price rally.

The company announced to Bursa Malaysia yesterday that its amended sale and purchase agreement (SPA) to acquire a 63% stake in Indonesia-based oil and gas company PT Anglo Slavic Indonesia (ASI) from PT Anglo Slavic Utama (ASU) had lapsed.

In the announcement, Protasco said the agreement had lapsed on July 28 as the conditions laid out in the agreement had not been fulfilled by PT ASU and the security provider within the conditional period of six months.

Protasco disclosed that it was in discussion with PT ASU for the purchase price to be returned through, among others, cash and disposal of the secured shares in accordance with the terms of the restated SPA.

PT ASI indirectly holds the rights to develop and produce oil and gas in the Kuala Simpang Timur (KST) field in Aceh, Indonesia. The KST oilfield is stated to have 14.2 million barrels of recoverable reserves, with the probability that 90% of the reserves can be recovered.

In an announcement dated July 25, Protasco said it had met with PT ASU and requested for more information. PT ASU said that it would provide the information within a week.

“The board of Protasco will deliberate again on the proposed acquisition after receiving the said information and [an] immediate announcement will be made to Bursa once the final decision has been made,” it said in its July 25 announcement.

Protasco’s original agreement with PT ASU was signed in December 2012 for the acquisition of a 76% equity interest, or 95 million shares, in PT ASI for US$55 million.

The share purchase was to mark the group’s entry into the oil and gas industry, which is relatively vibrant now thanks to the high crude oil price.

However, in late January this year, Protasco and PT ASU revised the terms of the SPA. Under the revised agreement, Protasco would buy 78.75 million PT ASI shares or a 63% stake for US$22 million — a vastly lower price against the orignial valuation.

The restated deal came with a guaranteed consolidated net profit of US$22 million in the next four years. Under the profit guarantee, Protasco stands to realise a gain of US$2.5 million from the Indonesian unit in the current financial year ending Dec 31.

The amended SPA raised eyebrows as the valuation of PT ASI fell to RM108.57 million, from its original valuation of RM233.56 million, which Protasco said was in view of the valuation of shares carried out by KPMG Singapore in January this year.

Protasco’s share price has more than doubled since December 2012, rising from RM1 to a recent peak of RM2.13.

This article first appeared in The Edge Financial Daily, on August 6, 2014.