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This article first appeared in The Edge Financial Daily on January 30, 2019

KUALA LUMPUR: Uzma Bhd plans to buy another 15% stake in Setegap Ventures Petroleum Sdn Bhd for RM36 million cash.

Uzma said the proposed acquisition allows the group to increase its equity interest in Setegap Ventures, as well as to consolidate a higher percentage of the latter’s earnings.

“With Setegap Ventures, the group is able to provide a more comprehensive and integrated solutions to customers,” it added.

In a filing with Bursa Malaysia yesterday, Uzma said its wholly-owned subsidiary Tenggara Analisis Sdn Bhd had entered into a conditional share sale agreement with Nasri Nasrun Ventures Sdn Bhd (NNVSB) to acquire 694,350 shares in Setegap Ventures.

Uzma already owns 49% of Setegap Ventures via Tenggara. NNVSB owns a 15% stake, Datuk Nasri Nasrun (22%) and Mohd Zulhaizan Mohd Noor the remaining 14%. Nasri is the sole director and shareholder of NNVSB and also Setegap Ventures’ managing director and director.

The proposed acquisition will raise Uzma’s stake to 64% in Setegap Ventures – which provides support services to the oil and gas (O&G) industry such as well pumping and coil tubing. “Such services are complementary to the existing services of Uzma and its subsidiaries such as geoscience and reservoir engineering, drilling as well as project and operation services for the O&G industry,” said Uzma.

Setegap Ventures has been contributing positively to Uzma’s earnings since Tenggara's acquisition of 30.02% and 18.98% equity interest in the company in January 2012 and January 2015 respectively.

For the 18-month financial period ended June 30, 2018, Setegap Ventures contributed RM10.39 million to the group's pre-tax profit.

“Despite a downturn in the local O&G sector, Setegap Ventures actually expanded its operations, evident from the doubling of its workforce from 166 as at Dec 31, 2015 to 317 as at Dec 31, 2018,” said Uzma, adding that Setegap Ventures has plans to expand its offerings of other support services for the O&G industry.

“With a recent uptick in exploration and production activities following the rebound in crude oil prices since early 2016, coupled with the business initiatives undertaken by Setegap Ventures, its prospects appear positive moving forward,” it added. The proposed acquisition is expected to be completed by the first quarter of 2019.

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