KUALA LUMPUR (Feb 5): Uzma Bhd is spending RM52.8 million to raise its stake in oil and gas (O&G) support services provider Setegap Ventures Petroleum Sdn Bhd (SVP) allowing the group to consolidate an even higher percentage of SVP’s earnings.
Uzma, in an exchange filing, said its wholly-owned subsidiary Tenggara Analisis Sdn Bhd today signed a conditional shares sale agreement with SVP’s founder Datuk Nasri Nasrun for the 1.02 million SVP shares, representing a 22% equity interest.
The acquisition, which will be funded via bank borrowings, will bump up Tenggara’s equity interest in SVP from 64% to 86%.
SVP has been contributing positively to Uzma since the latter bought into it in 2012.
The company currently has an order book of RM700 million for the next five years, comprising, amongst others, contracts for coiled tubing services, well pumping services, integrated well services and deployment of reinforced thermoplastic pipe.
In its financial year ended June 30, 2019, SVP registered a profit after tax (PAT) of RM21.28 million on revenue of RM142.58 million.
“Since Tenggara’s earlier acquisition of 18.98% equity interest in SVP in January 2015, SVP has recorded commendable performance against the backdrop of falling crude oil prices from mid-2014 to early 2016, which adversely affected the earnings of the entire value chain of the local O&G industry.
“For FY15 and FY16, SVP managed to record PAT of RM12.8 million and RM5 million respectively," said Uzma.
“Despite the downturn in the local O&G sector, SVP actually expanded its operations. This is evident from the doubling of its workforce from 166 as at end-2015 to 317 as at end-2018.
“With the uptick in exploration and production activities following the rebound in crude oil prices from early 2016 to mid-2018, SVP recorded PAT of RM23.65 million for the 18-month financial period ended June 30, 2018 (or RM15.77 million on an annualised basis) and RM21.28 million for the FY19, representing growth of 34.94% on an annualised basis,” it added.
Uzma said the prospects of SVP appear positive moving forward, as the Petronas Activity Outlook 2020-2002 indicated a steady lineup of drilling activities is planned for 2021 and 2022 and a steady outlook of drilling activities is expected through Petronas’ effort of optimising its resource requirement.
It cited the SVP management in saying that there are plans to increase SVP’s market share locally and internationally, as well as invest in the research and development of well intervention and stimulation capabilities.
“SVP will continue to work towards becoming a comprehensive well servicing and maintenance, production enhancement solutions as well as providing end-to-end solutions to clients, from problem identification to post-execution evaluation and monitoring that complement the services provided by Uzma,” the filing read.
The proposed acquisition is expected to be completed within one month.
Shares in Uzma rose 1.5 sen to 86 sen apiece today, bringing it a market capitalisation of RM275.23 million.