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Cahya Mata Sarawak ventures into energy market via acquisition of Scomi Energy’s oilfield assets

Cahya Mata Sarawak ventures into energy market via acquisition of Scomi Energy’s oilfield assets

17 Mar 2022

Diversified group Cahya Mata Sarawak Bhd (CMS) is venturing into the energy sector via the acquisition of Scomi Energy Services Bhd’s oilfield operations for RM21 million.

In a statement on Thursday (March 17), CMS said it has, through two of its subsidiaries Cahya Mata Oiltools Sdn Bhd and Oiltools International Sdn Bhd, entered into four conditional sale and purchase agreements with Scomi Energy to acquire Scomi Oilfield Ltd together with various companies and assets within the Scomi Oilfield Group of Companies.

“The proposed acquisitions, which are expected to be completed in the third quarter of 2022, represent a strategic investment with potential synergy with the group’s existing businesses as well as the opportunity to diversify into the global energy sector and grow its revenue and earnings,” said CMS.

It said the acquisitions will be funded via internal funds and/or bank borrowings.

The group said that Scomi Energy is one of the top five global providers of drilling support services and products for the oil and gas industry, offering drilling fluids and drilling waste management services.

CMS expects to leverage Scomi Oilfield’s global presence to expand its clientele and serve as a bridge for the expansion of its existing businesses into markets that the group has a presence in.

It expects the business to grow amid increased drilling activity given the elevated crude prices, and pointed out that it will not be taking on additional debt with the acquisition.

“After weighing the risks and opportunities, the management considers the proposed acquisitions as a timely strategy to diversify into the global energy sector as there is potential for Oiltools to become an important contributor to CMS from the increase in overall drilling activities due to increased demand for oil and gas as well as the restructuring of the global energy supply chain,” said CMS.

CMS shares fell one sen or 0.9% to close at RM1.12 on Thursday, giving it a market capitalisation of RM1.2 billion. Scomi Energy closed unchanged at five sen, valuing the company at RM23.42 million.

Source: The Edge Markets