KUALA LUMPUR (April 1): DNex Oilfield Services Sdn Bhd, an 80%-owned subsidiary of Dagang Nexchange Bhd (DNex), is acquiring drilling tools, equipment and ancillaries from Baker Hughes (Malaysia) Sdn Bhd for US$4.2 million (RM16 million) cash.

In a filing today, DNex said it entered into a sale and purchase agreement with Baker Hughes for the purchase on March 31, 2015. Subsequent to that, DNex entered into an equipment rental agreement on April 1, to rent the said equipment to Baker Hughes for the latter’s business operations at US$87,860 per month.

The rental agreement period is for four years and comes with an option to extend for two more years.  

DNex (fundamental: 2.6; valuation: 0.3) said the the purchase would be funded by internally-generated funds.  

"The group is positive about the growth potential and prospects in the services sector within the oil and gas industry. The acquisition of the equipment will create a new engine of growth for the group in the long run," said DNex.  

DNex shares ended unchanged at 30 sen today, with a market capitalisation of RM232.57 million.  

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)