KUALA LUMPUR: Kulim (M) Bhd is buying a 60% equity interest in Indonesian oil and gas (O&G) player PT Citra Sarana Energi (CSE) for US$133.55 million (RM464 million) to strengthen its footprint in Indonesia’s expanding O&G sector.
In a filing with Bursa Malaysia yesterday, Kulim said its wholly-owned unit Kulim Energy Nusantara Sdn Bhd had entered into a conditional subscription and share purchase agreement with CSE for the proposed acquisition.
The deal comprises the purchase of 6,282 shares or 41.88% stake in CSE for US$64.15 million and the subscription of 6,796 new shares representing a 31.18% stake in the company for US$69.40 million.
The shares will be acquired from the existing shareholders of CSE namely PT Wisesa Inspirasi Sumatera and PT Inti Energi Sejahtera Tbk.
CSE is currently involved in the exploration and development of an O&G field in South West Bukit Barisan (SWBB) Block, Central Sumatra, Indonesia.
“The purchase consideration for the proposals will be funded using internal funds,” said Kulim, adding that the proceeds from the divestment of its 48.97%-subsidiary, New Britain Palm Oil Ltd, will be used to partly finance the acquisition.
The group said the acquisition is in line with its move to diversify its business activities, in reducing its reliance on the palm oil segment, while also expanding its involvement in the O&G sector, particularly into the niche upstream activities in Indonesia.
“Barring any unforeseen circumstances, the proposals are expected to be completed in the first half of 2015,” said Kulim.
The proposals are not subject to the approval of Kulim shareholders or any other relevant Malaysian government authority but are subject to the approvals of relevant authorities in Indonesia and shareholders of CSE.
In a separate statement, Kulim managing director Ahamad Mohamad said the group has obtained the green light from the Indonesian authorities to drill three additional wells next year.
He said Kulim is working closely with relevant authorities to pave the way for the group to generate revenue streams possibly as early as the second half of 2015.
Ahamad said the 30-year concession period for the SWBB block provides vast potential given that Central Sumatra is considered one of the most prolific oil production basins in Indonesia.
“We anticipate that capital expenditure to be lower given that onshore projects are relatively cheaper in exploration costs as compared to offshore projects,” he said.
The stock closed 10 sen or 3.13% higher at RM3.30 yesterday, bringing its market capitalisation to RM4.38 billion.
This article first appeared in The Edge Financial Daily, on December 11, 2014.