Sumatec cuts offer price for Kazakh oilfield

PETALING JAYA: Sumatec Resources Bhd has reduced its offer price to acquire an oilfield in Kazakhstan to US$290mil (RM1.015bil), citing the sharp drop in crude oil prices.

“Despite the decline in oil prices, the board remains optimistic of the long-term prospects of the proposed acquisition due to the long-term potential of the oil and gas industry in the global energy market,” the company told Bursa Malaysia.

The purchase price for Borneo Energy Oil and Gas Ltd, which has the rights over Bazachi Neft LLP, was cut by US$60mil (RM210mil).

Sumatec said the change in the terms of the sale and purchase agreement (SPA) that was signed on Sept 8, 2014 was agreed to by both parties, as the price of crude oil plunged from an average US$103.19 per barrel in August 2014 to US$57.33 per barrel in December 2014.

Bazachi is an independent upstream oil and gas company involved in the exploration, production and trading of oil and natural gas.

Of the new purchase price of US$290mil, US$210mil will be satisfied in cash and the balance US$80mil via the issuance of 1.217 billion shares at 23 sen each to the vendors: 684.78 million shares to Abu Talib Abdul Rahman and 532.61 million shares to Dr Murat Safin.

The adjustment also takes into account the drop in Sumatec’s share price from 48 sen in August 2014 to 21 sen in December 2014.

Sumatec will pay US$190mil for the Bazachi Neft oilfields, which have “proved and probable” oil reserves of 68.87 million barrels of oil, and US$100mil for ancillary assets.

Both parties have agreed to extend the date to fulfil the conditions precedent from Jan 30, 2015 to July 31, 2015.