Friday 29 Mar 2024
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KUALA LUMPUR (April 28): UMW Oil & Gas Corp Bhd (UMW-OG) is disposing of its entire 50% stake in the NAGA 1 semi-submersible drilling rig for US$1.65 million (RM7.2 million).

This is a huge discount compared with the group's original cost of investment in NAGA 1 of US$17 million on March 11, 2005. The rig is co-owned with Japan Drilling Co Ltd.

In a filing with Bursa Malaysia today, UMW-OG said its wholly-owned subsidiary UMW Drilling Co Ltd (UDC) has signed a sale and purchase agreement with JDC Panama Inc for the proposed disposal.

It noted that the disposal consideration of US$1.65 million was arrived after taking into account the prevailing market value of NAGA 1 of US$3.31 million based on an open tender exercise carried out on Jan 13 this year.

"In the current oil price environment, the proposed disposal is aligned with the group’s strategy to reduce exposure from high maintenance costs and capital expenditure of NAGA 1," said UMW-OG.

It added that the proposed disposal is not expected to result in a material loss to the group for the financial year ending Dec 31, 2017.

The proposed disposal is expected to be completed on May 9, 2017.

According to UMW-OG’s Annual Report 2015, NAGA 1 is servicing a long-term contract with Petronas Carigali Sdn Bhd until August 2018, working offshore Malaysia.

UMW-OG's fleet of offshore drilling rigs and hydraulic workover units (HWUs) currently consists of one semi-submersible drilling rig (NAGA 1), seven premium jack-up drilling rigs and five HWUs.

UMW-OG shares closed 4.5 sen or 7.09% higher at 68 sen, with 19.82 million shares done, giving it a market capitalisation of RM1.46 billion.

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