MISC Acquires 50% Stake in Gumusut-Kakap Semi-FPS for $445M

Malaysia's MISC Berhad, an energy-based logistics and maritime solutions provider, entered Wednesday into a conditional share purchase agreement (SPA) with E&P Venture Solutions Co. Sdn Bhd (EPV) to acquire the remaining 50 percent equity stake in Gumusut-Kakap Semi-Floating Production System (L) Limited (GKL) that it does not own for $445 million, the firm said in a filing with local stock exchange Bursa Malaysia .

GKL, a wholly-owned subsidary of PETRONAS Carigali Sdn Bhd (PCSB), owns the Gumusut-Kakap semisubmersible floating production system (FPS), which is now on a 25 year charter with Sabah Shell Petroleum Co. -- a unit of Royal Dutch Shell plc. -- that commences October 2014. The offshore production facility is in operations at the deepwater Gumusut-Kakap field offshore Sabah, Malaysia and can produce 150,000 barrels of crude oil per day from subsea wells, while equipped for 300 million cubic feet per day gas injection and 225,000 barrels of water per day water injection.

"Upon completion of the SPA, GKL will become a wholly-owned subsidiary of MISC," the company said in the announcement.

PCSB is an upstream arm of Malaysia's national oil company Petroliam Nasional Berhad (PETRONAS), which holds 62.67 percent equity interest in MISC.

In December 2012, MISC disposed half of its 100 percent stake in GKL to EPV for $305.7 million in order "to strengthen MISC’s and its subsidiaries’ (MISC Group) financial position to weather the tough operating conditions in the shipping industry prevailing at that point in time, while still retaining 50 percent of GKL’s income stream. The monetization of GKL enabled the MISC Group to pare down its debt and improve its liquidity and cash position."

Since its stake disposal of GKL, the MISC Group’s financial position has improved significantly. Going forward, the limited future growth prospect in the offshore oil and gas segment may adversely impact the MISC Group’s ability in securing new offshore contracts.

As such, "the Proposed Acquisition represents a good opportunity for MISC to fully own an asset that is under a long-term lease with a strong client, which is a subsidiary of an international oil and gas company," MISC said.



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