Oil and Gas Stocks Malaysia: Sumatec & the Rakushechnoye Story
•By Nizam Alias
Artikel ini juga tersedia dalam Bahasa Melayu
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SUMATEC Bhd is a company established since 1979 that supplies oil and gas resources for the downstream sector.
Other companies active in this industry include Sapura Energy, Velesto Energy, Deleum, Hibiscus Petroleum, Reach Energy, and Scomi.
Natural gas accumulates above liquid petroleum. Natural gas is formed from methane, small amounts of ethane, propane, and heavy hydrocarbons.
When methane is cooled to a temperature of -161°C, it changes from gas form into liquid.
Through this process, the substance that has changed into liquid form is reduced to 1/600 of the total volume of natural gas in its gaseous form.
Therefore, it can be transported in special tanks in large quantities to locations that require it.
When liquefied and cooled, liquefied natural gas can be stored at atmospheric pressure.
Hence, it can serve as a useful gas reserve and can be released when demand for the commodity exceeds normal rates.
The Rakushechnoye field is located in Western Kazakhstan, on the Mangyshlak Peninsula.
Approximately 15 kilometres inland from the Caspian Sea and roughly 105km southeast of Aktau, a major regional centre.
Rakushechnoye is situated near export infrastructure; 120km to Aktau Port and 60km to the main oil and gas pipeline.
Sumatec initially entered into a joint investment agreement with Markmore Energy (Labuan) Limited and CaspiOilGas LLP to develop the Rakushechnoye O&G field located in western Kazakhstan.
However, the contract to develop the field in Kazakhstan was terminated effective 17 October 2019.
Sumatec''s wholly-owned subsidiary Sumatec Oil and Gas LLP (SOG) filed with Bursa Malaysia on 7 October.
It had received a notice from CaspiOilGas LLP (COG) to terminate the joint investment agreement (JIA) to develop the field.
The financial and legal predicaments faced by Sumatec were highlighted by COG in the termination notice.
This had affected SOG''s ability to comply with its obligations to carry out the appropriate investment/work programme.
And to provide the necessary funding for petroleum operations under the said agreement.
COG had requested Sumatec to confirm whether SOG could continue to operate under the JIA and provide assurance that it would be able to manage its financial position, as well as set aside the winding-up petition by its ship-debt lender.
In addition, CaspiOilGas requested Sumatec to present solutions to these issues and offer a credible plan to ensure that operational funding could proceed smoothly.
Last week, Sumatec was granted an extension by Bursa Malaysia to submit its regularisation plan by 29 October 2019.
On the same day, Sumatec announced the resignation of its managing director, Abu Talib Abdul Rahman, citing personal reasons.
The regularisation plan involves cash of up to RM100 million and the construction of gas processing facilities, as well as settlement arrangements with the Sumatec group''s creditors involving a settlement amount of 15 sen per RM1.00 owed to creditors.
The company will make the necessary announcements regarding the details and further developments on the above matters in line with the requirements under the Main Market Listing Requirements of Bursa Malaysia in due course.
Oil and gas stocks in Malaysia refer to companies listed on Bursa Malaysia that are involved in the exploration, production, refining, or distribution of petroleum and natural gas. Notable examples include Sapura Energy, Velesto Energy, Deleum, Hibiscus Petroleum, Reach Energy, and Scomi.
CaspiOilGas LLP terminated the joint investment agreement with Sumatec''s subsidiary SOG effective 17 October 2019, citing financial and legal difficulties that impaired SOG''s ability to fund petroleum operations at the Rakushechnoye field.
Yes, oil and gas penny stocks carry significant risk. As seen with Sumatec, companies may face contract terminations, winding-up petitions, and regulatory challenges. Always conduct thorough due diligence before investing.
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