DNEX (4456) DAGANG NEXCHANGE BHD completes acquisition of remaining 50% stake in UK-based greenfield asset
KUALA LUMPUR (Sept 23): Dagang NeXchange Bhd (DNeX), via its 90% owned subsidiary Ping Petroleum Ltd, has announced the completion of the acquisition of the remaining 50% interest in the UK North Sea Block containing the Avalon Oil Development.
The acquisition is from Summit Exploration and Production Ltd, a wholly-owned subsidiary of Sumitomo Corp, for an initial cash consideration of US$5 million (RM21.09 million) with further contingent payments, giving a total price of US$17 million (RM71.72 million).
In a statement today, DNeX said with 100% control of Avalon, the group has greater flexibility in executing the project in line with its growth strategy and diversification of assets.
The purchase consideration was funded by Ping's internally generated funds, the group said.
DNeX group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir said: "Avalon is a high-quality and low-cost development asset that complements Ping's existing upstream portfolio in the North Sea. This acquisition enables Ping's full control of the development project, especially on the concept selection and field development plan."
"This will expedite the development and allow Ping to take advantage of the present market conditions that offer price-competitive development solutions.
"Our aim is to initiate procurement, project execution and drilling operations to deliver first oil by July 2023, subject to the UK Oil and Gas Authority approval of the Avalon concept and field development plan," he added.
The Avalon oilfield has an estimated volume of 9.3 million stock tank barrels (MMstb) of 1C, 15.5 MMstb of 2C and 21.0 MMstb of 3C oil contingent resources. In addition to that, it has 4.1 billion of standard cubic feet (Bscf) of 1C, 4.0 Bscf of 2C and 5.5 Bscf of 3C gas contingent resources.
Syed Zainal Abidin said the Avalon acquisition is one of many examples of opportunities for Ping to capture commercially attractive assets from international oil and gas majors as they divest and shift towards renewable energy space.
In addition to this greenfield asset, Ping owns several fields in the Anasuria Cluster that is also located in the North Sea.
"Like the Anasuria hub, the planned Avalon hub can provide third party access to fields within its proximity. This can provide economies of scale that can further lower Ping's average operating cost per barrel.
"Overall, Ping's outlook is promising as we are seeing early signs of macro market recovery of demand amidst supply discipline. Ping is expected to register better contribution amid the rising oil prices driven by higher global oil demand as economies reopen in many parts of the world," said Syed Zainal Abidin.
DNeX was the most actively traded stock on Bursa Malaysia today, with a volume of 262.27 million shares, 87% higher than its 200-day average trading volume of 140.58 million.
The counter rose six sen or 7.79% to close at 83 sen, valuing the group at RM2.57 billion. DNeX has 3.09 billion issued shares.