Cyberjaya, 23 September 2021 – Dagang NeXchange Berhad (“DNeX”), via its 90 per cent owned subsidiary Ping Petroleum Limited (“Ping”), has announced the completion of the acquisition of the remaining 50 per cent interest in UK North Sea Block 21/6b, License P.2006, containing the Avalon Oil Development. The acquisition is from Summit Exploration and Production Limited, a wholly-owned subsidiary of Sumitomo Corporation for an initial cash consideration of USD5.0 million (or equivalent to RM21.09 million) with further contingent payments, giving a total purchase consideration of USD17.0 million (or equivalent to RM71.72 million). Ping now owns 100 per cent of the green field asset, Avalon Oil Development, and this will accord DNeX greater flexibility in executing the project in line with the company’s growth strategy and diversification of assets. The purchase consideration was funded by Ping’s internal generated funds.
The Avalon Oil Development lies entirely in the United Kingdom North Sea block, 21/6b, 20km Northeast of Aberdeen at a water depth of 120m. In 2014, oil was discovered by the 21/6b-8 exploration well and the discovery was successfully appraised in 2017 by the 21/6b-9 appraisal well. The Avalon Oilfield has an estimated volume of 9.3 million stock tank barrels (MMstb) of 1C, 15.5 MMstb of 2C and 21.0 MMstb of 3C oil contingent resources. In addition to that, it has 4.1 billion of standard cubic feet (Bscf) of 1C, 4.0 Bscf of 2C and 5.5 Bscf of 3C gas contingent resources.
“Avalon is a high-quality and low-cost development asset that complements Ping’s existing upstream portfolio in the North Sea, UK. This acquisition enables Ping’s full control of the development project, especially on the concept selection and field development plan. This will expedite the development and allow Ping to take advantage of the present market conditions that offer price-competitive development solutions. Our aim is to initiate procurement, project execution and drilling operations to deliver first oil by July 2023, subject to the UK Oil and Gas Authority (“OGA”) approval of the Avalon concept and field development plan,” said Tan Sri Syed Zainal Abidin Syed Mohamed Tahir, Group Managing Director of DNeX.
He said this acquisition is one of many examples of opportunities for Ping to capture commercially attractive assets from international oil and gas (“O&G”) majors as they divest and shift towards renewable energy space. The Group is exploring for more opportunities to further expand Ping’s portfolio of assets in the North Sea, UK as well as Southeast Asia region.
“In addition to this greenfield asset, Ping owns several producing fields in the Anasuria Cluster that are also located in the North Sea, UK. Like the Anasuria hub, the planned Avalon hub can provide third party access to fields within its proximity. This can provide economy of scale that can further lower Ping’s average operating costs per barrel. Overall, Ping’s outlook is promising as we are seeing early signs of macro market recovery of demand amidst supply discipline. Ping is expected to register better contribution amid the rising oil prices driven by higher global oil demand as economies reopen in many parts of the world,” he added.