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KrisEnergy launches S$169.5m rights issue to support growth in oil and gas production
UPSTREAM oil and gas company KrisEnergy has launched a S$169.5 million rights issue to support its capital expenditure in growing oil and gas production in existing fields as well as near-term development projects.
The rights issue is expected to generate net proceeds of approximately S$165.6 million through the issuance of 440,144,838 new shares on the basis of 42 rights shares for every 100 existing shares.
The rights shares will be issued at S$0.385 each, representing a discount of approximately 13.5 per cent to the closing price of S$0.445 per share on June 12, 2015, and a discount of approximately 9.9 per cent to the theoretical ex-rights price of S$0.427 per share.
Singapore conglomerate Keppel Corporation has subscribed for its full entitlement, which amounts to 137,985,120 rights shares, or approximately 31.3 per cent of the rights issue.
Private equity energy specialist First Reserve has also undertaken to subscribe for approximately 43.9 per cent of its entitlement, amounting to 87,298,701 rights shares or approximately 19.8 per cent of the rights issue.
The remaining rights shares, representing approximately 48.8 per cent of the rights issue, have been underwritten by Merrill Lynch (Singapore), the lead manager and underwriter for the rights issue.
Meanwhile, Keppel will act as sub-underwriter for all such underwritten rights shares. In the event that Keppel is required to sub-underwrite all the sub-written shares, upon completion, Keppel's interest in KrisEnergy will not exceed 50 per cent, and KrisEnergy will remain an associated company of Keppel.
Keith Cameron, KrisEnergy's CEO, said: "The rights issue will enable us to continue our strategy of near-term growth in reserves, resources and production, and will increase our borrowing capacity for future projects such as in the G6/48 licence in the Gulf of Thailand, where we made a series of oil discoveries in the Rossukon area earlier this year for which we intend to submit a development plan shortly."
KrisEnergy is developing the Nong Yao and Wassana oil fields in the Gulf of Thailand, both of which are expected to commence production in the second half of this year.
The company is also targeting to drill two development wells beginning in the fourth quarter of this year to increase production in the Bangora gas fields, onshore Bangladesh.
Loh Chin Hua, Keppel's chief executive officer, also commented: "We are confident that the experienced team at KrisEnergy will be able to execute their growth strategy, developing their projects and planned programmes."
The company today received approval in-principle from the Singapore Exchange for the rights issue and will convene an extraordinary general meeting (EGM) to seek shareholder approval for the rights issue, amongst other resolutions.
The rights issue is targeted to be completed by mid-August this year, after the convening of the EGM and receipt of applicable approvals from regulatory authorities. An indicative timeline for the rights issue will be provided to shareholders in due course.
Upon news of the rights issuance, as at 4.40pm on Monday, KrisEnergy's counter was trading down 1.12 per cent at 44 Singapore cents.