KUALA LUMPUR (Nov 13): BTM Resources Bhd, which is principally involved in the wood-based industry, is partnering Markmore Energy (Labuan) Ltd (MELL), which is controlled by Tan Sri Halim Saad, to participate in the proposed production of liquefied petroleum gas (LPG) using natural gas supplied from the Rakushechnoye Oil and Gas Field.

BTM Resources said the proposed LPG production will provide it with an opportunity to diversify and expand its source of income, considering how its operations in recent years have been affected by higher production cost and lower profit margin of wood products, while prospects of the wood-based industry for the years ahead remain weak.

MELL is wholly owned by Markmore Sdn Bhd, an investment holding company in which Halim has a 99.99% stake, while Sumatec Resources Bhd managing director Abu Talib Abdul Rahman holds the remaining one share in the company. MELL, in turns, wholly owns CaspiOilGas LLP — which holds a 25-year concession expiring on Aug 2025 for subsoil use of the Rakushechnoye Oil and Gas Field in Kazakhstan.

Via a Heads of Agreement (HoA) inked between the two parties today, an LPG production plant and gas processing facility with a capacity of 100 million standard cubic feet per day shall be constructed and operated by BTM Resources, at its own cost.

In return, BTM Resources will be entitled to the profit of up to 166 metric tonne per day of LPG and 3,700 barrels per day of condensate produced at the LPG plant, which is expected to allow it to enjoy a guarantee of an operational profit of minimum return of 12% per annum (profit guarantee) for this project.

MELL, on the other hand, will undertake to exclusively supply natural gas from the Rakushechnoye O&G field for processing at the plant.

With the HoA, both parties will undertake due diligence review on MELL in the next two months.

BTM Resources said its board believes the proposed LPG production would contribute positively to the company's future earnings and improve its financial position, profitability as well as returns on shareholders’ funds.

To maximise BTM’s payback period for its investment in the proposed LPG production, MELL shall also procure gas supply for the plant at a preferential rate of US$1 per million British thermal unit (MMBTU), the company added.

BTM shares closed two sen or 21.05% higher at 11.5 sen today, valuing the company at RM16.26 million.