Rex International has US$70.8m war chest; eyes monetising Oman asset by end-2019

OILFIELD services firm Rex International Holding on Monday said it has a war chest of about US$70.8 million comprising cash, cash equivalents and quoted investments as at June 30, 2019, and plans to monetise its Oman asset by end-2019.

The Catalist-listed firm recorded a net profit of US$23.6 million for its second quarter ended June 30 after monetising its Norway assets, but is buying back shares after its executive chairman said the market is not pricing in the value of its assets.

"We have been valued by the market at cash and even below cash, without any value placed on our Oman discovery asset, our Norway assets or our Rex Virtual Drilling technology," said Dan Broström, executive chairman of Rex International.

The firm's second quarter 2019 results listed a share buyback mandate of about S$6 million.

In the past week, it had bought back a total of 2.3 million shares at S$0.064 per share "as it is confident of its potential prospects in Norway and Oman", said Mr Broström.

Rex shares closed up S$0.001 or 1.5 per cent at S$0.068 on Friday.

Rex's 90 per cent-owned subsidiary Lime Petroleum AS had in June acquired a 30 per cent interest each in two Norwegian Sea drilling licences. They are slated to be drilled in the second half of 2019.

Lime Petroleum remains a pre-qualified company and will continue to benefit from the Norwegian tax system with 78 per cent cash refunds of all exploration expenditures annually, said Rex.

In Oman, Rex will look to generate revenue from its GA South asset, which it aims to put into production by end-2019.

It will be financed mainly through off-balance sheet financing, said the company.

"The fiscal policy for exploration and production activities in Oman differs from Norway, where the cost pool spent in the Block 50 licence could be recouped upon production," said Rex.

"The Norway transaction is a fruition of our business strategy as set out in our initial public offering document; that is, to find oil using our liquid hydrocarbon indicator technology Rex Virtual Drilling, sell oil-in-the-ground and recycle capital," said CEO Måns Lidgren.

"Although we achieved discoveries in Oman and Norway respectively, this monetisation strategy could not be executed during the oil price rout which started in 2014 until early this year when an opportunity to divest arose."

Amendment note: The comments in the last two paragraphs were originally attributed to Dan Brostrom, executive chairman of Rex International. They have been amended to reflect the correct source, Mans Lidgren, chief executive officer of Rex International