Rex hungry for more Mideast deals

Hibiscus' acquisition of a stake in Lime was part of the strategy to prepare the company for a listing, which is likely on the London Stock Exchange, says Rex chairman


Nasdaq-listed Rex Oil and Gas Ltd is confident that its majority owned Lime Petroleum Plc will secure more oil concessions in the Middle East, mainly due to the presence of Hibiscus Petroleum Bhd as a stakeholder of its subsidiary company.

Last month, Hibiscus, through its wholly owned subsidiary Gulf Hibiscus Ltd, entered into a share subscription and purchase deal to acquire a 35 per cent equity in Lime for US$55
million (RM172.8 million).

Rex chairman Karl Lidgren said Lime and Hibiscus, a special purpose acquisition company,were currently having advanced discussions with a number of Middle-Eastern governments and expected to finalise most of those discussions this year.

“Then we will announce them (results). Within Lime, we now have three or four concessions. I will not be surprised to double that number (concessions) within a year,” he told Business Times recently.


Currently, Lime has three concessions in the Middle East, namely Ras Al Khaimah (1,200sq km) and Sharjah (1,600 sq km) in
the United Arab Emirates (UAE) and a third one, the largest, in Oman (16,900 sq km).

Each concession is for 20 years. The group is expected to secure its fourth concession in Fujairah, also in the UAE, by
end of the year.

Lidgren said he expected Hibiscus to be deeply involved in the process, with the seismic studies to start by end of the year.

“Hopefully, that will result a very concrete activities in terms of drilling, where Hibiscus will be very much involved. In the meantime, we will also try to get more concessions.”

He also acknowledged that Hibiscus' acquisition of a stake in Lime was part of the strategy to prepare the company for a listing, which is likely on the London Stock Exchange.

"The board will decide by the end of next year on whether or not to list or seek other fund-raising alternatives.

" But as far as we are concerned, with the presence of Hibiscus on board, we are ready for listing. It (listing) could be done within several weeks," he said.

In fact, Lidgren said Lime had organised several roadshows prior to the announcement of the deal with Hibiscus, where they met with brokers in London and Singapore on the proposed listing.

"We have close to a 100-per cent response," he said.

"There is no doubt that a company with new technology is more than welcome to go to the stock exchange, but this is a decision to be taken by the board."

On why Hibiscus was chosen as a strategic partner in Lime, Lidgren said the company had been approached by more than a dozen of companies, of which most were major oil companies.

As a small company, he said Rex was looking for a partner of about the same size but with different competency.

He said the group had the technology and knowhow to locate concessions with a high possibility to find oil and gas.

However, it needed other competencies that the Bursa-listed Hibiscus possesses.

"In the process of using satellite, identify concessions, shooting and interpreting seismic studies, we have the competence in house but when it comes to drilling and taking care of findings, for instance, we don't have the competence.

"We decided to go to Hibiscus because of its competence that we need to have, like taking care of the seismic findings," he said.

By March next year, Rex will hold a 56.4 per cent stake in Lime, Hibiscus with 35 per cent and the remaining 8.6 per cent to be held by Schroder & Co Banque S.A.

Meanwhile, Hibiscus managing director Kenneth Pereira said with the purchase of the 35-per cent stake in Lime, the company had managed to significantly cut down on the time that it needed to venture into the oil and gas exploration business in the Middle East.

"The gestation period of four years, normally associated with this kind of oil and gas projects, has been cut down to twelve months for us.

"Now, within 12 months, we are ready to drill," he said.