GLOBALTEC Formation Bhd, the merged entity of AutoV Corp Bhd, AIC Corp Bhd and Jotech Holdings Bhd, is about to become a full-fledged oil and gas exploration and production company with a focus on unconventional resources.
It is acquiring a 60% stake in New Century Energy Resources Ltd (NCE) for US$100,000 (RM320,000), which will soon be asset owner and operator of three coal bed methane (CBM) concessions in the south and central of Sumatra, Indonesia.
CBM is a form of natural gas extracted from coal beds. CBM can be used as civil fuel, industrial fuel, fuel for power generation, vehicle fuel and important chemical raw materials.
Globaltec told Bursa Malaysia it is also acquiring a 60% stake in New Century Energy Services Ltd (NCES) for US$100,000 in cash.
NCE is an investment holding company involved in the exploration and production of oil and gas with a primary focus in unconventional oil and gas assets. Meanwhile NCES provides services for the unconventional oil and gas market.
The director of NCE and NCES is Kee Yong Wah, a seasoned oil executive with more than 30 years in the unconventional sector of oil and gas in China and the US.
The concession owner for the Indonesian fields is NuEnergy Gas Ltd (NGY), an Australian listed gas and ancillary power generation development company, which focuses on unconventional gas in Indonesia.
NGY has 3 production sharing contracts in South and Central Sumatra, covering 3,978 square kilometres. NGY is the operator of all 3 PSCs which are Muara Enim (40% share), Muara Enim II (30% share) and Rengat (100% share).
Globaltec will take control of NGY’s concessions because NCE will subscribe for 83.3 million shares in NGY for 3 Australian cents (8.91sen) to raise A$2.5mil (RM7.4mil), thus owning 19.9% of NGY.
NCE will then appoint three of its own directors to replace the existing three directors in NGY.
NCE will further subscribe to shares of NGY and participate in its rights issue for a total commitment of A$10mil (RM29.7mil), to be completed by Dec 31, 2014 for a minimum price of 3 cents.
When contacted by StarBizWeek, Globaltec executive chairman Datuk Seri Goh Tian Chuan says this is Globaltec’s new beginning.
“I am confident of Kee’s past track record and am thus investing in Kee and his team which have a combined experience of 150 years.
“In China, Kee and his team have drilled more than 160 CBM wells.
“We were in the midst of divesting our less profitable businesses. At the same time, we were looking for new profitable business ventures when Kee came along with his niche in unconventional resources. I saw this as the best opportunity to ride on the new wave of unconventional resources. This was something we could not pass,” says Goh.
Kee, the CEO of NCE, has served 26 years with global oil servicing company Halliburton, with a particular focus on unconventional resources.
Meanwhile, Lim Beng Hong, the CEO of NCES has served 24 years in Halliburton and Weatherford. The key management in both companies has extensive experience in the unconventional oil and gas industry including subsurface, well drilling, completion and production optimisation techniques that can significantly enhance the productivity of oil and gas wells.
Goh adds that this is one of the best opportunities of growth for Globaltec, as for a relatively low cost, it will immediately become operator and asset owner in the hydrocarbon-rich area of Sumatra.
For the PSCs in Muara Enim and Muara Enim II, NGY had in September 2012 received a Netherland Sewell and Associates Inc independent resource estimate of 4.2 trillion cu ft of prospective gas resources in these fields.
Goh says the plan is for NCE to drill three wells in the first quarter of 2015.
“As NCE has conducted seismic studies over the last one year and secured all required approvals, drilling can start almost immediately,” says Goh.
The concession fields have well-established pipeline infrastructure that connects the fields to Sumatra, Singapore, East Kalimantan and the Jawa markets.
These pipes have capability of handling 1.2 billion cu ft of gas per day.
“The field is considered ‘low risk, high return’ as over 1,500 wells have been drilled in this basin with ample drilling and logging data. The CBM wells are also less than 1,000m.
The trading volume of Globaltec too has been attracting keen interest. On Friday, Globaltec was the heaviest traded counter of the day, closing 2 sen higher to 9 sen on volume of over 230 million shares.
Globaltec was amalgated and listed on Bursa Malaysia on June 2012 at an issue price of 12 sen. The past two years have seen its share price drift listlessly and languish at the 5.5 sen level.
For the nine months to March 31, 2014, Globaltec’s net loss widened to RM2.98mil from RM2.96mil previously. Revenue dropped 12.45% to RM76.92mil.
The company is involved in the low margin business of precision machining, semiconductor products and automotive manufacturing.
Goh is the biggest shareholder of the company with a 19.51% stake, while its deputy chairman Kong Kok Keong has a 13.11% stake. Lembaga Tabung Angkatan Tentera is also a substantial shareholder with a 6.25% stake.
Globaltec’s share base is 5.27 billion shares and has a market capitalisation of RM484.4mil.
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