Sumatec details funding for new Kazakh assets

KUALA LUMPUR: Sumatec Resources Bhd plans to raise half the amount it needs to pay for two new assets worth US$250mil (RM794mil) it is proposing to buy in Kazakhstan via a rights issue and the rest through an issuance of shares.

Though it is a PN17 company, Sumatec wants to tap the capital markets for funds and expects the rights to be issued before the year is out.

All that is dependent on how fast it can enter into a sale and purchase agreement with the two asset owners, though Sumatec chief executive officer Chris Dalton told reporters yesterday that he expected a deal to be concluded before year’s end. The due diligence is under way.

Dalton also expects Sumatec to be out of the PN17 status next month.

Last week, Sumatec said it had entered into a framework agreement with Abu Talib Abdul Rahman and Dr Murat Safin to buy the entire equity interest in Borneo Energy Oil and Gas Ltd for US$250mil, which in turn has rights over Bazachi Neft LLP, which is an independent upstream oil and gas company involved in the exploration, production and trading of oil and natural gas. Sumatec is a service provider in the downstream sector of the oil and gas industry.

Buzachi currently has two 25-year subsoil use contracts, valid till November 2026, for the exploration and production of oil and gas in Karaturun Vostochnyi and Karaturun Morskoi fields (Buzachi fields).

He explained that the Buzachi fields, which were in shallow waters (one to two metres deep), were located about 277km northeast of Aktau city in the northern part of Mangistau region, Kazakhstan. There are 26 wells at the fields, five of which are currently in production and producing between 400 and 600 barrels of oil per day. Oil transportation is convenient as the fields are located just 180km away from the main Uzen-Atyrau-Samara oil pipeline.

Dalton said upon completion of the purchase of the two assets, Sumatec intended to ramp up production and in three years’ time he reckoned Sumatec, with all its other oil and gas assets, would be able to produce about 3,500 barrels of oil per day.

Apart from holding a stake in Borneo Energy, Abu Talib also owns 0.6% equity in Sumatec, and is a long-time associate of Tan Sri Halim Saad, who has 23.96% in Sumatec.

Dalton expected a contribution of US$1.62mil to Sumatec’s profit in the fourth quarter of this year from the two assets, and the figure will be substantial next year.

Beyond the US$250mil outlay, Dalton said the company also needed to spend about RM150mil in capital expenditure for additional facilities at the fields which would be raised via issuance of bonds.

Sumatec also has the rights to the oil and gas field in Rakushechnoye, Kazakhstan, which has yielded a 14.5% increase in proven oil reserves to 129 million barrels.

Sumatec closed 2.5 sen up at 42 sen yesterday.