PETALING JAYA: Dagang NeXchange Bhd’s (DNeX) equity stake in Ping Petroleum Ltd rose to 90%, following the completion of the acquisition for an additional 60% stake in the upstream oil & gas (O&G) player, valued at US$78 million (RM314.3 million).
Of the sum, it noted US$40.95 million will be settled in cash while the remaining US$37.05 million will be settled via the issuance of new ordinary shares in the group and new redeemable preference shares in its wholly owned subsidiary DNeX Energy Sdn Bhd. Thus making Ping a subsidiary of DNeX via DNeX Energy.
With the completion of this exercise the group will consolidate the O&G player into its earnings from July 2021 onwards.
Since its 30% stake acquisition in Ping in 2016, the company has consistently delivered profits and positive cash flow due to a low operating cost of under US$20 per barrel.
In the previous three financial years, the upstream player has delivered a cumulative net profit of US$34.7 million. Given that Ping will now be deemed as a subsidiary compared to an associate previously, the consolidation of Ping’s revenue and earnings will contribute positively to DNeX’s overall financial performance.
With regard to its newest subsidiary, DNeX’s group managing director Tan Sri Syed Zainal Abidin Syed Mohamed Tahir commented the upswing in Brent oil prices to above US$70 per barrel level augurs well for its energy segment.
“Against this favourable backdrop, we will be expanding our business in the upstream O&G sector to capitalise on the upcycle,” he said in a statement.
“To enhance our production levels at the Anasuria Cluster, we have earmarked about US$71 million for redevelopment activities over the next five years.”
The development activities includes the drilling of infill wells, debottleneck exercise and facilities improvement work.
Syed Zainal stated being in the driver seat will allow greater flexibility to plan and implement longer term strategies to realise Ping’s long-term growth potential.
He pointed out the shift in investment of major oil players to the 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 plans will be directed to expand and unlock the potential of other brownfield assets within the UK and Southeast Asia region.”
The managing director opined the group’s overall outlook in the energy sector looks promising with the lineup of developments coming on-stream and the rise in oil prices driven higher global demand as economies reopen around the globe.
DNeX stated former ExxonMobil executives Zainal Abidin Jalil and Datuk Robert Fisher will serve as Ping’s CEO and chairman respectively.
Simultaneously, Fisher currently serves on the group’s board as an independent non-executive director, while Zainal holds the executive director post.
“With their track record and deep expertise in the energy sector, we believe they are able to drive Ping to become a leading global upstream oil and gas company,” said Syed Zainal.
