KUALA LUMPUR: Dagang NeXchange Bhd’s (DNeX) wholly-owned subsidiary, DNeX Energy Sdn Bhd has acquired an additional 60 per cent stake in Ping Petroleum Ltd valued at $78.0 million ($1=RM4.15), expanding its holdings to 90 per cent.
Ping is an upstream oil and gas (O&G) company with a balanced portfolio of producing and developing O&G assets in the Anasuria Cluster located in the North Sea, United Kingdom (UK).
In a statement today, DNeX, an information technology services provider, said the acquisition exercise will be satisfied by a combination of $40.95 million cash consideration and the issuance of new ordinary shares in DNeX.
It also includes new redeemable preference shares in DNeX Energy for the remaining $37.05 million, it added.
The group said with the acquisition, DNeX will be consolidating Ping’s financial performance into the group’s earnings from July 2021 onwards.
It noted that since DNeX’s acquisition of a 30 per cent stake in Ping in 2016, the latter has consistently delivered profits and generated positive operating cash flow driven by its ability to keep its operating costs below $20 per barrel.
“In the previous three financial years ended Dec 31, 2018, 2019 and 2020, Ping reported a cumulative audited net profit of $34.7 million.
“As Ping will now be deemed a subsidiary as compared to an associate previously, the consolidation of Ping’s revenue and earnings will contribute positively to DNeX’s overall financial performance,” the group said.
Group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir said the upswing in Brent oil prices to above $70 per barrel level augurs well for the group’s energy segment.
“Against this favourable backdrop, we will be expanding our business in the upstream O&G sector to capitalise on the upcycle.
“To enhance our production levels at the Anasuria Cluster, we have earmarked about $71 million for redevelopment activities over the next five years,” he said.
These activities include drilling of infill wells, debottlenecking exercise, and facilities improvement work, he explained.
According to Syed Zainal, being in the driver’s seat also allows the group greater flexibility to plan and implement longer-term strategies to realise Ping’s long-term growth potential.
“The shift in the investment of major oil players to energy transition and renewable energy sector has presented us with opportunities to acquire mature and producing O&G fields at attractive prices.
“Ping’s expansion plan will be directed to unlock the potential of other brownfield assets within the UK and Southeast Asia region,” he said.
Syed Zainal added that the overall outlook of DNeX Energy is promising with a line-up of exciting developments coming on-stream.
Hence, the expected better contribution from Ping amid the rising oil prices driven by higher global oil demand as economies reopen in many parts of the world, he said.
On another note, the group said post-acquisition Ping will be led by Zainal Abidin Jalil as managing director and Datuk Robert Fisher as chairman.
Fisher currently serves as DNeX’s independent non-executive director, while Zainal Abidin currently sits on DNeX’s board as executive director. – Bernama
