In Indonesia, PTCT has been granted approval by the relevant authorities to establish an oil rig inspection centre ("ORIC") on Batam Island to provide testing, technical inspection and mandatory certification of all drilling oil rigs operating in Indonesia. In addition, PTCT will set up a rig refurbishment facility on Batam Island to undertake engineering works in upgrading oil rigs. Both the ORIC and the rig refurbishment facility are expected to commence operations by the end of this year.
Mr. Kris Wiluan, the Executive Chairman of KS Energy said, "The establishment of the ORIC and rig refurbishment facility has the strong support of Asosiasi Pemboran Minyak & Gas Bumi Indonesia ("APMI"). APMI, the Association of Indonesian Oil & Gas Drilling Contractors, oversees 135 members who own and/or operate 178 units of onshore and offshore drilling oil rigs in Indonesia. According to APMI, up to 60% of its members' rigs require refurbishment and APMI will direct its members to approach our JV for the rig upgrading services. With more oil rigs operational in Indonesia, APMI hopes that this will result in an increase in the national oil output."
In a separate announcement today, KS Energy's 54.8% SGX-listed subsidiary Aqua- Terra Supply Co. Limited ('ATS") has also entered into a memorandum of understanding with PT Citra Tubindo Tbk ("PTCT") to supply all equipment, parts, consumables and accessories to the rig refurbishment facility to be established and operated by PTCT. By being a one-stop material procurement specialist to the rig refurbishment facility, ATS will undertake to procure and supply consumable and nonconsumable materials and parts. Non-consumable items that are not carried by ATS will be sourced externally and aggregated by ATS before shipment to Batam.
In a second announcement, ATS proposes to acquire 152.5 million shares representing a 28.43% interest in SSH Corporation Ltd ("SSH"), for 27 cents per share or a total cash consideration of S$41.175 million (the "Acquisition") under a conditional sale and purchase agreement with Pacific Oilfield Equipment Investment Corporation, Advanti (Int'l) Pte Ltd and Mr Lee Seng Quee. SSH is in the business of supplying high-grade industrial materials and products such as seamless pipes, flanges, valves, fittings as well as welding equipment and consumables to the oil and gas industry. The businesses of ATS and SSH are complementary with each other and the proposed Acquisition will allow the KS Energy Group to participate in the capabilities and product offerings of SSH.
The proposed Acquisition will present opportunities for generating revenue synergies in the supply business through cross-selling to each others' customer base. The proposed Acquisition is consistent with ATS' strategy of being an integrated service provider and procurement specialist and it will strengthen ATS' competitive position as a one-stop material procurement specialist to the rig refurbishment facility in Batam.
Chew Thiam Keng, the Managing Director of KS Energy commented, "The JV with PTCT will enable the Company to expand its capital equipment business into Indonesia in a significant way. This will constitute a new growth area for the Group. Together with ATS as a one-stop material procurement specialist to PTCT's rig refurbishment facility, the KS Energy Group is well positioned to play a fast growing and important role in the Indonesian oil & gas industry. The proposed Acquisition by ATS will effectively avoid issues pertaining to potential conflict of interests as the KS Energy Group expands in Indonesia."
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