Download the Prospectus here
Offer Price: $1.10
Offer Size: 151.9m new shares
Public Tranche – 19.9m shares
Placement Tranche – 132m shares
NAV per share (post-IPO): US$0.453 (about S$0.57)
Historical PE: NA
Market Cap (post-IPO): S$1510m
Open: 12 July 2013
Close: 17 July 2013 12pm
Trading: 19 July 2013 9.00 a.m. (on “ready” basis)
Introduction
KrisEnergy Ltd ("KE" or "The Company") is an independent upstream company focused on the exploration, development and production of oil and gas in Southeast Asia. The group was established in 2009 by the founders, who previously created and built Pearl Energy, a Southeast Asian oil and gas producer and explorer.
Leveraging on the group’s expertise in Southeast Asia, KE embarked on a focused strategy of acquiring assets in countries and basins where the founders and technical team have extensive knowledge and experience, with the commitment to build a leading oil and gas exploration and production company in Southeast Asia. The group’s target focus area stretches from the Surma Basin in Bangladesh in the west to the Papuan Basin in the east,and from offshore southern China in the north to Indonesia in the south.
Since inception, KE has built a portfolio of oil and gas assets that now encompasses 14 contract areas, of which the group operates 6, in 4 countries, and spans the entire upstream life cycle of exploration, appraisal, development and production.
The company have two producing oil and gas assets in the Gulf of Thailand and have signed the SPA to purchase TBL in Bangladesh, which holds an upcoming interest in a producing gas field. KE also have an oil and gas asset in offshore North Sumatra in Indonesia that ceased production on July 11, 2013 and which they intend to relinquish shortly after this Offering. They are developing reserves in one contract area in the Gulf of Thailand, have six further contract areas in the Gulf of Thailand, including G6/48 for which we are awaiting government approval for our farm-in, the East Java Sea and the Makassar Strait with Development Pending resources, and have one contract area in the Makassar Strait with Development Unclarified resources. There are numerous exploration prospects in the company contract areas. They are also exploring for oil and gas in multiple locations within their remaining four exploration contract areas, located offshore in the Malacca Strait, Gulf of Tonkin and South China Sea, and onshore in West Papua, Indonesia.
Financial Highlight
Use of IPO Proceeds
Dividend Policy
Dilution
Competition
Business Strategies and Future Plans
• Increasing production by developing discovered resources.
• Increasing the value of the group’s existing exploration portfolio.
• To be a leading independent oil and gas exploration and production company in Asia.
• Plans to continue to secure additional oil and gas assets while actively managing the current portfolio.
Competitive Strengths
• Geographical diversity with core basin focus.
• Multi-asset balanced portfolio across the entire oil and gas exploration and production life cycle.
• Experienced management team with at least 20 years of experience in the oil and gas industry.
• Experienced and recognised controlling shareholders being Keppel Corporation and First Reserve.
• Well positioned to leverage on the strong demand and growth for oil and gas in Asia.
• Dedicated on-the-ground presence.
Key Risks
• The group conducts the majority of operations through joint operations and has limited control over the areas which the group does not operate.
• The agreement to farm-in to G6/48 in Thailand and the group’s acquisition of all outstanding shares in TBL may not be approved by the respective host governments.
• Reserve and resource estimates depend on many assumptions that may turn out to be inaccurate.
• More than half of the group’s contract areas are unproven and may never be developed.
• KrisEnergy may face unanticipated increased or incremental costs.
• The group cannot accurately predict their future decommissioning liabilities.
• KrisEnergy faces political, economic, fiscal, legal, regulatory and social uncertainties.
My personal View
KrisEnergy Ltd will be the first under SGX's new rules which allow loss-making mineral,
oil and gas exploration firms with a market value of at least $300 million to list on the
mainboard. But it is glad to see that the company registered a net profits of 1.4 million
for Q1 FY 2013, and if I am right, we will be able to see better result coming on the way.
It is also a pleasant coincidence to know that "The group was established in 2009 by
the founders, who previously created and built Pearl Energy, a Southeast Asian oil
and gas producer and explorer. If the readers don't know about Pearl Energy, it is not
exactly a surprise as the stock was only listed for less than a year before it was bought
over and taken private. Those readers that has charting service can look-up Pearl Energy
at P68 and see exactly what happened to the stock during those wild and crazy trading
day. I still have a vague memory of trading Pearl Energy before way back in 2005-2006.
Another thing that I like about this IPO is that, the cornerstone investors are paying the
same price as the public, that is $1.10 Keppel Corp which is a major shareholder is
actually paying 91cts which is not too distant to what the public is paying.
I believe that KrisEnergy will have a rather great debut on this coming Friday and
I will not be surprise to see another Pearl Energy or even Sakari Resources (fka
Straits Asia) in the making. If its financial result can improves over the quarters and
with better exploration result as another catalyst, I expect this to be a wonderful trading
stock which I will be adding to my close watch after it debuts. My recommendation
is to show-hand and apply for the share, and then pray that you will kena the lucky
draw. This should be hot IPO so the chances of getting it is slim but nevertheless,
the reward far exceed the $2 application fee which is insignificant in this sense.
Sources: KrisEnergy IPO Prospectus, UOB IPO Fact Sheet, Straits Times.
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