PNB supportive of O&G consolidation

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) is supportive of a consolidation among oil and gas companies in Malaysia, including its investee company UMW Holdings Bhd’s oil and gas arm UMW Oil and Gas Corp Bhd (UMW O&G), to withstand challenges within the oil and gas industry amid the low oil price regime.
PNB president and CEO Datuk Abdul Rahman Ahmad said it is continuously engaging in discussions with the board and management of UMW O&G to ensure that the company will ride through this difficult time.
“For any initiative, we will work together with the UMW management, board and the right party to make an announcement. We see UMW as a strategic company and we believe in the long-term viability of their businesses,” he told reporters after announcing the income distribution for Amanah Saham Bumiputra (ASB) and Amanah Saham Nasional (ASN) here yesterday.
He said consolidation has been something that the oil and gas industry, Petroliam Nasional Bhd and the government have been talking for quite some time.
“We’re supportive of consolidating. We believe that’s necessary, not only for our companies but for the oil and gas industry at large,” said Abdul Rahman.
He said it is not easy to consolidate and perhaps that is why there has not been any consolidation in the local oil and gas space till now, because of challenges like different shareholder requirements and needs.
“If there are opportunities presented to PNB that any of our Malaysian (oil and gas) companies wants to consolidate, we’ll be open and happy to support them if it makes sense,” said Abdul Rahman, adding that they are not in talks with any parties yet.
PNB chairman Tan Sri Abdul Wahid Omar said with the recovering oil price, oil and gas stocks will recover.
“We believe that there will be some consolidation among various oil and gas players in the market in 2017. The fact that oil price is increasing will be a good opportunity for that consolidation to happen,” said Wahid.
PNB is a major shareholder of UMW Holdings, having a 58.09% stake in the group as at Oct 31, 2016. According to UMW O&G’s annual report, as at March 31, 2016, PNB has a direct 0.59% interest in UMW O&G and an indirect interest of 55.73% via UMW Holdings.
For the nine months ended Sept 30, 2016, UMW O&G saw a net loss of RM267.76 million compared with a net profit of RM36.82 million in the previous year’s corresponding period. Its revenue fell 62% to RM267.34 million from RM708.57 million a year ago.
Earlier, PNB’s wholly owned subsidiary Amanah Saham Nasional Bhd announced an income distribution of 6.75 sen a unit and a bonus of 0.50 sen a unit for its flagship fund ASB for the financial year ending Dec 31, 2016. More than nine million unit holders of ASB holding over 143 billion units will receive total income distribution of RM9.78 billion and bonus distribution of RM500.40 million.
ASNB also declared an income distribution of 5 sen a unit for ASN for FY16. The income distribution of RM92.86 million would benefit more than 1.2 million unit holders holding more than 1.85 billion units of ASN.
“We always focus on the fundamentals. We have the right asset allocation strategy and we always believe in long-term investments. We’re hopeful that the environment will be conducive for us to provide competitive returns (moving forward),” he said.
Wahid said although PNB expects 2017 will be another uncertain year, it sees sufficient grounds for cautious optimism. With the implementation of its six-year strategic plan, PNB will continue to strive to deliver sustainable and competitive returns for its unit holders.