This will be done through the subscription of new shares arising from Sumatec’s acquisition of the Buzachi Neft oil field that is estimated to cost the company US$350mil (RM1.12bil).
In the proposed acquisition, Sumatec would undertake a rights issue which Halim would subscribe for his portion. Halim will accrue the additional shares by purchasing a block that will be put up for sale by a vendor of the Buzachi asset.
“I see Sumatec as a stable flagship for my investment in oil and gas. I am here to stay for the long term,” said Halim in a statement.
Halim, who has about 22% stake in Sumatec, estimated that it would cost him some RM550mil to increase his interest in the company.
On Friday, Sumatec exited its Practice Note 17 status. Its shares closed 1 sen higher to 47.5 sen on volume of 175.2 million shares yesterday.
Last month, Sumatec announced that it was looking to acquire the Buzachi Neft oil field from Borneo Energy Oil and Gas Ltd that has a proven and probable oil reserves of 68.86 million barrels.
Sumatec has said that the acquisition price translated into US$3.63 per barrel.
The US$350mil consideration will be paid via US$225mil (RM720mil) cash and US$125mil (RM400mil) worth of Sumatec shares.
To fund this, Sumatec announced a proposed renounceable rights issue of up to 2.3 billion new Sumatec shares together with up to 2.3 billion free warrants at an indicative issue price of 40 sen per rights share. Sumatec shareholders with two shares will be entitled to subscribe for one rights and the warrant is thrown in free.
In the deal, a vendor of the Buzachi Neft oil field – Abu Talib Abdul Rahman – is offering for sale up to 727.27 million Sumatec shares, which Halim has agreed to take up.
In July, when Sumatec first announced its interest in the Buzachi oilfield, it entered into a framework agreement with the vendor of the oilfield, Borneo Energy Oil and Gas Ltd, for US$250mil. The shareholders of Borneo are Abu Talib and Dr Murat Safin.
The shares for the Borneo Energy shareholders are priced at 55 sen, and this was determined by the Sumatec board of directors.
“I am confident that 55 sen is a good price to buy,” said Halim.
He denied speculation that he would be disposing of his existing shares to help fund the rights issue subscription.
“If I sell the shares now, I may not be able to pick them up later at better prices. I intend to increase my stake, not reduce it.”
Meanwhile, Sumatec cautioned that it might not achieve its net profit of RM69mil for its year ended Dec 31, 2014.
Sumatec said that due to the technical requirements to install artificial lift pumps on a number of wells, there had been a delay in bringing some of the wells on to production.
On this recent warning, Halim said he did not understand what the concern was.
“Production-wise, based on Markmore’s and CaspiOilGas’ records, we are on track to reach the target this year. However it’s probably wise for Sumatec to be on the conservative side and share with their investors.
“Profit-wise, our estimates show that we are within range. You may have to confirm with the Sumatec management,” he said.
The Star Online-Sep 2, 2014
