KUALA LUMPUR: Sapura Energy Bhd's partnership with Austria's OMV AG will augur well for shareholders as both companies are a good fit to take on the region's burgeoning oil and gas sector.
Analysts said the 50:50 collaboration will result in Sapura receiving cash proceeds of up to RM4 billion which will augur well for their future expansion plans.
"I see no reason why shareholders will reject the partnership as Sapura will receive a cash injection to expand its operations as well as consolidate its position in the global oil and gas industry.
"Shareholders have already approved Permodalan Nasional Bhd (PNB) rights issue. I expect shareholders to also give the Sapura-OMV deal the greenlight," said a PNB source.
Shareholders are set to vote for or against the alliance at Sapura's extraordinary general meeting (EGM) next Monday.
Shareholders should also note that Sapura's prospects are bright due to its RM16 billion order book.
In November 2018, Sapura proposed to divest 50 per cent of its wholly-owned exploration and production unit Sapura Upstream Sdn Bhd to OMV Aktiengesellschaft, of which part of the proceeds will be used to repay its debt.
Sapura president and chief executive officer Tan Sri Shahril Shamsuddin had said the union of the two companies will bring about good processes, capital and enhances the technology that exists in both companies.
With shareholders approval, the deal will propel Sapura to become one of the world's top five oil and gas outfits and turn around the firm back into profitability by 2020.
"Let's not forget that with the deal, Sapura would gain access into OMV's treasure trove as the company has operations in Russia, Europe, the Middle East, Australia and New Zealand with proven reserves of 1.15 billion barrels of oil equivalent and average daily production of 348,000 barrels a day," said the source.
He added shareholders at the coming EGM should take the cue from PNB which has so much trust in Sapura by backing the firm's rights issue to raise RM4 billion.
Yesterday, Sapura announced it had successfully raised RM4 billion from the rights issue which resulted in PNB becoming the firm's largest shareholder owning a 40 per cent stake.
"With the RM4 billion from PNB and another RM4 billion from the OMV partnership, Sapura has sufficient capital
to grow and operate on a balanced sheet.
"Shareholders have got nothing to lose. They should vote for the deal to go through," said an analyst at Public Investment Bank Bhd.
Both Sapura and OMW aim to be oil and gas powerhouses by tripling production in the next two years from 10,000 barrels of oil equivalent a day to 30,0000.
"Sapura OMV has long term plans to replicate its business model from Malaysia to South East Asia, other Asian countries and ultimately the Asia Pacific Region. So there are big plans in store for Sapura shareholders.
OMV AG deputy chairman Johann Pleininger previously said that the company is cash rich and hopes to turn Sapura OMV into a cash machine in the coming years.
This profit will trickle down to the shareholders of Sapura as well as PNB.
Sapura is 40 per cent owned by PNB, 42.2 per cent by local and foreign participation and Sapura Technology Sdn Bhd owns a direct and indirect stake of 16.3 per cent.