Small Asian Firms Seize Upstream Opportunities in Weak Market

Some Small Firms Exit Agreed Deals

While lower asset prices may tempt small firms to make upstream acquisitions, a few of them withdrew after agreeing to such deals earlier due to concerns about the impact of a further decline in oil prices.

“We see [global crude] oil prices averaging $37 a barrel this year, but sub-$20 [at some point in 2016] is not impossible,” Wan Zahidi, an oil and gas analyst with Malaysia’s RHB Group told Rigzone.

One of these transactions involved Loyz Energy Ltd., with the Singapore-based firm announcing its purchase June 10, 2015 of China-focused Primeline Energy Holdings, Inc. – owner of exploration and development rights of Block 25/84 and Block 33/07 in the East China Sea – for $136.9 million (SGD 197 million). The transaction was terminated Sept. 30, 2015, with Primeline citing market volatility and sentiment for Loyz’s exit.

“Sentiment on the ground is that oil price would fall [further], people are watching and not doing anything [including upstream asset purchase] as they feared catching a falling knife … That’s the thinking in the short term,” Wan Zahidi explained.

Another two small Asian firms that reversed acquisition plans included Malaysia’s Hibiscus Petroleum Berhad and Singapore-listed Rex Holding International Ltd.

Hibiscus Petroleum Berhad aborted plans to purchase Talisman Energy Inc.’s 25 percent stake in the Kitan oil field in JPDA-01-105 in Bonaparte Basin offshore Australia, while Rex International Holding withdrew from a deal in October 2015 to acquire a 30 percent interest in WA-488-P exploration permit off Western Australia from MEO Australia Ltd.


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