DNeX to acquire 30% equity in Ping Petroleum

PETALING JAYA: Dagang NeXchange Bhd's (DNeX) wholly-owned subsidiary DNeX Petroleum Sdn Bhd is acquiring 30% equity of Ping Petroleum Ltd via a proposed subscription of shares for US$10 million (RM42 million) cash.
In a filing with Bursa Malaysia yesterday, DNeX said its subsidiary has entered into a share subscription agreement with Ping Petroleum to subscribe for new ordinary shares of US$0.001 each, representing 30% of the enlarged issued share capital of Ping Petroleum.
The proposed share subscription will see DNeX Petroleum investing in Ping Petroleum's oil and gas businesses and assets, which includes the proposed acquisition of the Anasuria Cluster in the North Sea.
Ping Petroleum, an independent upstream company focused on shallow water offshore production, and Hibiscus Petroleum Bhd have jointly entered into sale and purchase agreements to each acquire 50% of the entire interests of Shell UK Ltd, Shell EP Offshore Ventures Ltd and Esso Exploration and Production UK Ltd in the Anasuria Cluster of oil and gas fields.
"The acquisition serves as part of critical building blocks to develop our diversification into oil, gas and energy in our journey to become a serious player in this sector. This asset is already on production and there are potential opportunities in terms of cost reduction, uptime improvement and future reserves development.
"It is expected to contribute positively to DNeX's future earnings that will propel profitable growth for the group, improving earning resiliency and enhance shareholders' value," said DNeX group managing director Zainal Abidin Jalil.
Taking into account DNeX Petroleum's proposed subscription of 30% of the enlarged issued share capital of Ping Petroleum and the Anasuria consideration of US$105 million (RM447.143 million) for the proposed acquisition, DNeX's effective interest of 15% in the Anasuria Cluster is valued at US$15.75 million (RM67.071 million).
Excluding the US$1 million (RM3.728 million) that DNeX Petroleum had paid as commitment fee to Ping Petroleum earlier in June, DNeX Petroleum has a balance consideration of US$9 million (RM38.327 million) to settle.
The US$1 million commitment fee was funded via internally generated funds and the group expects to fund the balance US$9 million via bank borrowings, tentatively in US dollars.
However, if the proposed acquisition of the Anasuria Cluster is terminated or not completed by June 30, 2016, the consideration paid by DNeX Petroleum less US$300,000 (RM1.278 million) will be refunded to DNeX Petroleum.
The proposed investment in Ping Petroleum is expected to be completed in the fourth quarter of 2015, pending approval from relevant authorities including the Securities Commission Malaysia, Bursa Malaysia Securities and DNeX shareholders.

AmInvestment Bank has been appointed principal adviser for the proposed subscription, which is expected to contribute positively to the future earnings and earnings per share of the group.