KUCHING: Reservoir Link Sdn Bhd (RLSB) plans to acquire a 30 per cent stake in Propel Maxflo Sdn Bhd for RM7.39 million in cash.
The wholly owned subsidiary of Reservoir Link Energy Bhd (RLEB) executed a binding term sheet recently with Propel Oilfield for the proposed acquisition of 545,044 ordinary shares, representing a 30 per cent equity interest in the company.
“The proposed acquisition is subject to the terms of a share sale agreement (SSA) to be entered into between RLSB and Propel Oilfield within two months from the date of the term sheet or within an extended period mutually agreed upon by both parties,” RLEB said in a filing with Bursa Malaysia.
The proposed purchase consideration will be funded through internally generated funds.
Kuala Lumpur-based Propel Maxflo specialises in providing products and services for exploration, drilling, and well maintenance, as well as enhanced oil recovery and improved oil recovery technologies.
Additionally, it offers production technologies for the offshore and onshore oil and gas, refining, chemical, and petrochemical industries.
Propel Maxflo is a wholly owned subsidiary of Propel Oilfield, which is 49 per cent owned by Propel Global Bhd (PGB) and 51 per cent owned by Rancak Nikmat Sdn Bhd.
PGB is listed on Bursa Malaysia’s Main Market.
“The term sheet serves as a framework to facilitate negotiations between RLSB and Propel Oilfield regarding a potential strategic partnership aimed at expanding and strengthening the upstream operations of RLEB and its subsidiaries in the oil and gas sector.
“Additionally, the proposed acquisition will present value and potential to the group, supported by alignment with Petroliam Nasional Bhd (PETRONAS)’s vision for oil and gas industry consolidation, enhanced market position, and operational efficiencies,” it said.
According to RLEB, PETRONAS has long advocated for the consolidation of the oil and gas industry to create a more resilient, efficient and competitive ecosystem.
“This aspiration reflects the need to address challenges such as market volatility, escalating costs, and the fragmentation of service providers within the industry.
“A consolidated landscape contributes to the stability and long-term viability of Malaysia’s oil and gas sector, aligning with PETRONAS’ broader aspirations for industry development,” it added.
RLEB said that together, RLSB and Propel Maxflo will command a larger market share in Malaysia’s oil and gas industry, positioning them as more competitive and resilient players in the sector.
Propel Maxflo’s established relationships with clients across Malaysia, Southeast Asia, the Middle East, and Africa will provide RLSB with access to new contracts and project opportunities.
RLEB also noted that post-acquisition could help reduce redundancies in operations, personnel and logistics, leading to potential cost savings and increased efficiency in project execution, supply chains, and client servicing.
“Additionally, both companies will be able to leverage shared expertise and resources, benefiting RLSB.
“Through synergies and optimised operations, profitability can be improved, creating better long-term value for stakeholders,” RLEB added in its rationale for the proposed acquisition.
