In a filing with Bursa Malaysia, DNeX said PING UK had signed a sales and purchase agreement with Summit Exploration and Production Ltd to acquire the stake it did not already own.
PING UK will pay an initial consideration of US$5mil to the vendor after completion of the transaction and settle the balance sum of US$12mil on a contingent basis upon completion of key project milestones, via a production-linked payment.
PING Petroleum UK is a sub-subsidiary of DNeX Energy Sdn Bhd, a wholly owned subsidiary of DNeX.
According to the filing, Summit Exploration and Production had been actively sourcing for a buyer for its 50% interest in the development of the Avalon Oilfield as it reportedly intends to shift away from the fossil fuel business.
"As the joint-owner and operator of the Avalon Oilfield, the Proposed Acquisition would allow PING UK to avoid any potential conflicting decisions which may arise should the Vendor sell its 50% interest to a third party.
In addition, the development of the Avalon Oilfield is expected to result in a significant increase in oil production and reserves for PING UK," said DNex.
It added that the development will provide significant portfolio risk mitigation as PING UK’s revenues would be realised from two independent installations, namely from the Anasuria cluster and the Avalon Oilfield after the first production from the Avalon Oilfield.
Further, the Avalon Oilfield is a proven discovery with significant upside in a politically stable region.