UMW-OG RE­STRUC­TUR­ING DEBTS

Com­pany aims to strengthen fi­nan­cials, max­imise rig util­i­sa­tion, among others

New Straits Times - - Business - ZARINA ZAKARIAH KUALA LUMPUR bt@me­di­aprima.com.my

UMW Oil and Gas Corp Bhd (UMW-OG) is de­ter­mined to re­turn to the black and is cur­rently re­struc­tur­ing its debts, said pres­i­dent Ro­haizad Darus.

He said the de­merger ex­er­cise be­tween UMW-OG and UMW Hold­ings Bhd, which was ap­proved by share­hold­ers re­cently, pro­vided sup­port to the com­pany and for a more struc­tured debt re­struc­tur­ing ex­er­cise.

“Af­ter the de­merger, we will have more sup­port in terms of fi­nance with the RM1.8 bil­lion rights is­sue, of which RM1.3 bil­lion will be used to re­duce debt and RM300 mil­lion for work­ing cap­i­tal.

“With that, our gear­ing ra­tio will go down from 1.81 to 0.56, which is sig­nif­i­cant, and our to­tal debt will re­duce from RM4.1 bil­lion to RM2.3 bil­lion.

“This will re­duce our an­nual in­ter­est rate and free up cash to en­able us to be more ef­fi­cient when we are ne­go­ti­at­ing with ven­dors for early pay­ment,” he told NST Busi­ness af­ter the com­pany’s an­nual gen­eral meet­ing re­cently.

Ro­haizad said at 0.56 gear­ing, the com­pany could op­er­ate at op­ti­mum level.

About the com­pany’s plans this year, he said it aimed to strengthen its fi­nan­cials, max­imise its rig util­i­sa­tion and get bet­ter day rates.

There are also plans to re­turn to Myan­mar, In­done­sia, Thai­land and Viet­nam.

“It is im­por­tant for us to re­turn to these coun­tries and en­sure that we don’t lose the mar­ket we have de­vel­oped.

“Look­ing at the cycli­cal na­ture of the busi­ness, we need to en­sure that we have a wider mar­ket, po­ten­tially in the Mid­dle East, so that we can spread the com­pe­ti­tion be­tween rigs and where chances of get­ting jobs are bet­ter,” said Ro­haizad.

He said rig util­i­sa­tion was im­por­tant and con­tin­u­a­tion of jobs was a must for the com­pany.

“With 59 rigs in Asia not in op­er­a­tion, it is dif­fi­cult to see the day rate in­creas­ing in the near fu­ture, al­though it has some­what sta­bilised.

“The fewer the rigs that are op­er­a­tional, the higher the day rate.”

Cur­rently, UMW has seven rigs at 100 per cent util­i­sa­tion, a progress com­pared to last year when there was only a 60 per cent util­i­sa­tion rate. “While we thank Petro­liam Na­sional Bhd (Petronas) for the jobs, we need to go back to the pre­vi­ous mar­kets we have ven­tured into.

“We want to help our­selves by get­ting jobs else­where and only go to Petronas when the sit­u­a­tion re­ally calls for it (such as dur­ing the low oil price cri­sis last year).

“Of course, Petronas is our pri­or­ity. But we are try­ing to en­sure that we have a steady flow of jobs in other mar­kets,” he said.

On May 14, UMW-OG bagged two con­tracts worth about US$34.81 mil­lion (RM151.08 mil­lion) from Petronas Cari­gali Sdn Bhd to pro­vide two jack-up drilling rigs for off­shore up­stream projects.

Ear­lier this month, a planned merger be­tween UMW-OG, Icon Off­shore Bhd and Orkim Sdn Bhd was called off.

Ekuiti Na­sional Bhd, the largest share­holder of Icon Off­shore and Orkim, said it ar­rived at the de­ci­sion af­ter con­sid­er­ing the sig­nif­i­cant cap­i­tal re­quire­ments of UMW-OG, which ne­ces­si­tated a far larger re­cap­i­tal­i­sa­tion than ini­tially en­vis­aged.

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