KUALA LUMPUR (Oct 23): Sumatec Resources Bhd plans to place out 348.27 million new shares to raise funds, which will finance its upstream oil and gas (O&G) operations in Kazakhstan.

In a statement to Bursa Malaysia today, Sumatec said it intended to place out the shares to independent third party investors. Sumatec said it had yet to fix the price of the private placement shares, which constituted about 10% of its issued base.

"The proposed private placement will enable the company to raise the necessary funds for its capital expenditure at the Rakushechnoye oil and gas field and general working capital without incurring additional interest costs as compared to other means of financing, such as through bank borrowings or the issuance of debt instruments.

"Further, given the current economic climate and the volatility in global oil prices, the board is of the view that it would be prudent for the company to use equity to fund Sumatec's operations at the Rakushechnoye oil and gas field," Sumatec said.

According to Sumatec, the placement proceeds will finance expenses related to drilling of new O&G production wells and enhancement of existing entities.

The company said it would also use the funds to upgrade its O&G-related equipment.

Sumatec said it hoped to complete the private placement by end of this year.

At 5pm today, Sumatec shares rose one sen or 7% to close at 16 sen for a market capitalisation of RM557.9 million. The stock saw some 33 million shares done.

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