It will propose a renounceable rights issue of up to 132 million rights shares on the basis of 1 rights share for every 1 existing share.
The exercise will strengthen its balance sheet, finance the company’s expansion plan and improve liquidity.
Overall its financial year 2015 ending Dec 31 2015 earnings per share will be diluted by 45%.
This exercise is expected to raise up to rm90 million. Its net cash position will increase from rm3.5 million to rm93.5 million, beefing up its war chest for expansion.
Any marginal field contract win will re rate the stock and transform the company into an E&P player.
Its latest order book of rm1.6 billion and tender book of rm2.6 billion are expected to sustain earnings growth going forward.
Risks are delay in contract disbursement and execution risk.
The positives are its direct exposure to enhanced oil recovery and exploration spending and room to grow.
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