DNeX gets nod for Ping Petroleum purchase
KUALA LUMPUR: Dagang NeXchange Bhd (DNeX) believes its diversification into oil and gas has a different structure and risk profile from the likes of oil and gas-focused special purpose acquisition companies (SPACs), which led its shareholders to vote for the acquisition of Ping Petroleum Ltd yesterday.
DNeX group managing director Zainal Abidin Abd Jalil said it was natural that the question of SPAC was raised at its EGM yesterday, which lasted about two hours, but noted that it received shareholders’ approval for the proposed subscription of a 30% stake by DNeX’s subsidiary, DNeX Petroleum Sdn Bhd, in Ping Petroleum.
“A SPAC’s structure is somewhat different. The investors have a cash option and they may view the oil and gas industry with a risk profile different than our investors in DNeX Petroleum. We believe we’re able to convince our shareholders to invest in oil and gas and have a long-term view in oil and gas,” he told reporters after the company’s EGM.
On Tuesday, shareholders of Sona Petroleum Bhd, an oil and gas SPAC, rejected its proposed acquisition of Stag Oilfield in Australia, fuelling concerns of a general aversion towards oil and gas assets.
The acquisition of Ping serves as part of DNeX’s growth strategy in the energy sector, namely the upstream oil and gas segment, through acquiring assets that are for sale and offer development opportunities, and can be progressively scaled up over time.
DNeX will gather the necessary expertise to leverage on its track record of being an upstream oil and gas player via Ping and bid for future oil and gas-related jobs in Malaysia and regionally.
Zainal said DNeX will continue to scale up and diversify its traditional IT business, but is also trying to create a second revenue pillar, which is the energy business, consisting of oilfield services, small-scale power business and upstream oil and gas.
“We’re also completing the OGPC acquisition by placing a rights issue and launching a couple of new business in oilfield services.”