Dnex proposes private placement to fund expansion

PETALING JAYA: Dagang Nexchange Bhd (Dnex) is seeking to raise funds via a private placement of up to 10% of its total issued shares to facilitate the expansion of its upstream and downstream oil and gas (O&G) segment.

In a filing with Bursa Malaysia, Dnex said the number of shares to be placed out and the price will be determined later.

Based on an indicative issue price of 41.5 sen per share and a placement of some 320 million shares, as outlined in its filing, Dnex expects to raise about RM133.44mil.

Dnex had ventured into the upstream O&G segment in 2016, via the acquisition of a 30% stake in Ping Petroleum Ltd and had subsequently increased its stake in Ping to 90% as at its financial year ended June 30, 2022 (FY22).

“The group intends to further grow and strengthen its presence in the O&G segment via strategic acquisition(s)/collaboration(s),” it noted in its filing.

The group highlighted a few awards and licences that it had secured during its FY23, which are in line with the group’s intention to further expand its existing O&G segment.

Earlier this year, Dnex subsidiary Ping Petroleum Sdn Bhd had signed two production-sharing contracts (PSCs) with Petroliam Nasional Bhd or PETRONAS for discovering O&G resources in Malaysia.

The first PSC is for the development and production of O&G resources in the Meranti cluster located 80kms offshore Kuala Terengganu.

Meanwhile, the second PSC is for the development and production of O&G resources in the A Cluster located 290kms off the coast of Miri, Sarawak, offshore Malaysia.

Earlier this month, Dnex, via its 90%-owned Ping Petroleum UK Plc, and Hibiscus Petroleum Bhd announced they had entered into a separate but identical farm-in agreement with Rapid Oil Production Ltd for an undeveloped field known as the Fyne Field in the North Sea, United Kingdom.

Under the agreement, Ping Petroleum and Hibiscus would separately acquire a 42.5% equity interest in the field, with the balance 15% to remain with Rapid Oil.

Dnex further added it intends to utilise the funds to address the funding requirements for the development of the Fyne Field, Meranti Cluster and the A Cluster.

In its FY22, Dnex’s O&G segment contributed about RM399.9mil or 27% of its total revenue of RM1.46bil.

“This is an increase of RM297.30mil as compared to the RM102.60mil recorded in FY21, reflecting the positive results of the group’s growth strategies and efforts in the O&G segment,” it added.

Dnex expects the proposed private placement to be completed by the final quarter of 2023.