Sumatec upbeat on second half performance
KUALA LUMPUR: Upstream oil and gas player Sumatec Resources Bhd expects to establish a steady revenue stream in the second half of the year on increased drilling activities.
"We're still doing okay, operations are steady," its CEO Chris Dalton told reporters after the company's AGM here yesterday.
Sumatec's first-quarter net profit ended March 31, 2015 jumped more than four fold to RM19.44 million from RM4.47 million in the previous corresponding period.
He noted the drilling works for newly acquired Buzachi fields in Kazakhstan will start by year-end.
However, Dalton explained that it would still depend on the rights issue exercise, which is awaiting approval from Bank Negara Malaysia.
"If we can complete the rights issue in a month or two, we should be able to execute these wells in the fourth quarter," he added.
The rights issue is expected to raise up to RM1.1 billion for Sumatec, to partly fund the RM1.02 billion acquisition of the Buzachi fields, which was given the green light by its shareholders two months ago.
The company plans to drill eight new wells within 6-12 months upon completion of the acquisition deal, potentially bringing total production to 1,600 barrels per day (bpd) from the current 1,000 bpd.
"We're maintaining a stable production right now on the wells we work on, we'll be monitoring the oil price, then act accordingly," Dalton said.
He said that oil price would improve in the second half of the year, which could ensure upstream players' profitability.
"How much (oil price will go up to) I can't speculate, but at least it would be steady," he opined, adding that Sumatec is still making profits at the current oil price level.
Dalton also noted that the company is always looking to acquire new oil and gas assets that fit into its portfolio within the Asian region.
"We have the strategy on where we want to grow, but I can't divulge anything at the moment," he said.
Local tycoon Tan Sri Halim Saad is the largest shareholder of Sumatec, with a 24.49% stake.