PETALING JAYA: Icon Offshore Bhd
is buying a subsidiary of Perisai Petroleum Bhd that owns and operates a jack-up rig known as Perisai Pacific 101 (PP101) at a price tag of US$40mil (RM173mil), according to sources.
Perisai bought the PP101 back in 2014 for US$200mil (RM604mil).
The deal would be a game-changer for Icon Offshore, which is in the business of chartering offshore marine vessels (OSVs).
Industry sources said that the acquisition of a jack-up drilling rig would complement Icon Offshore’s current business.
It is learnt that the purchase of PP101 is free from debt and will include the Petronas’ license plus a working team to operate the jack-up rigs.
The recent collapse in the global crude oil price has taken its toll on many oil and gas (O&G) assets and companies that are cash-strapped. Dealmaking is expected to be slow, putting pressure on asset valuation. So it will be an opportunistic purchase at this point especially for jack-up rigs, said a market observer.
An analyst said that while jack-up rigs depend heavily on the O&G climate, drilling rigs are the most important component of oilfield activity.
“When the industry turns around, jack-up rigs are usually a preferred drilling asset for oil majors, ” the analyst said.
When contacted, Icon Offshore’s managing director Datuk Seri Hadian Hashim reiterated that the company is always on a lookout for potential mergers and acquisitions that can add value to its growth.
Hadian, formerly CEO and founder of Sona Petroleum Bhd, was brought into Icon Offshore last September to help turn around the company.
Sona was a special purpose acquisition company that was set up to purchase an existing O&G asset.
Earlier this year, Icon Offshore undertook a corporate exercise to strengthen its balance sheet.
The corporate exercise was a complicated one. It entailed a 50-to-one share price consolidation, followed by a 100-for-one rights issue which saw the issuance of 2.35 billion new shares. Despite the sluggish market, Icon Offshore’s rights issue was oversubscribed by 19% and the company raised close to RM250mil.
Most of the cash proceeds were used to lower its debt levels, which brought gearing levels down to 1.11 times from 10.77 times previously. Its annual finance costs, meanwhile, would be reduced by about RM18mil.
Icon Offshore has been loss-making for four out of the last six financial years.
The company recently turned to the black, after recording a net profit of RM20.36mil the first quarter ended March 31,2020 (1QFY20), compared with a net loss of RM7.64mil.
Perisai Petroleum, which was delisted from Bursa Malaysia in January, has been under financial distress since 2016 due to the collapse of the oil industry in 2014.
Among the factors dragging asset-heavy Perisai are its high gearing, high impairments and low job prospects.
The company bought its first jack-up rig known as Perisai Pacific 101 (PP101) in 2014 at the heights of the industry, which saw crude oil prices surge more than US$100 per barrel.
In September 2014, global crude oil price went into a free fall to below US$30 per barrel in 2015 due to the boom of shale oil in the United States.
PP101 had bagged a three-year contract from Petronas Carigali in 2014 and was extended in December 2019. But, it is unclear how long the contract will be.
It is understood that the purchase was supported by Icon Offshore’s major shareholder Ekuiti Nasional Bhd.
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