SMJESB signs LoU on back-in option up to 20% stake in SB403 PSC

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SMJESB signs LoU on back-in option up to 20% stake in SB403 PSC

23 January 2024

SMJ Energy Sdn Bhd (SMJESB) steps into the new year with another deal for up to 20 per cent stake in the Block SB403 Production Sharing Contract (PSC), here, today.

Inking the Letter of Understanding (LoU), SMJESB, a wholly Sabah Government owned company, is offered by PETRONAS Carigali Sdn Bhd (PCSB) and E&P Malaysia Venture (EPMV), of up to 20 per cent participating interest in Block SB403 PSC under the back-in option, which is exercisable upon completion of work commitment or commercial discovery, whichever is earlier.

This is the SMJESB’s second exploration dealing with PCSB and EPMV through the same option. The first back-in option was signed on Feb 15 last year for Block SB409 PSC, situated offshore Sabah covering 14,556 sq km of area.

The event also marks the SMJESB’s latest achievement following the signing of the Commercial Collaboration Agreement (CCA) between the Sabah Government and PETRONAS on Dec 7, 2021, in line with its objectives to increase revenue sharing, have greater participation and say in the production and monetisation of oil and gas resources derive from the state.

Under the back-in option deal, SMJESB has the opportunity to access and review the information and data obtained from the exploration work programme before deciding to accept or turn down the backin option offer. With that, it is able to manage exploration risk to the minimum. No cost will be incurred by SMJESB should it choose not to take up the back-in offer.

Situated offshore north of Sabah covering 10, 256 sq km of area, Block SB403 was awarded to PCSB and

EPMV by national oil company PETRONAS during the 2023 Malaysia Bidding Round (MBR).

The LoU was signed by SMJESB Executive Director Upstream Albert Lo, PCSB Chief Executive Officer Hasliza Othman, and EPMV Head, Aliff Anwar, during a ceremony at the Kuala Lumpur Convention Centre.

As a prudent financial investor, SMJESB focuses on profitable oil and gas-producing assets with strong cash flow, while securing exploration options with minimal exploration risks.

Apart from the two PSCs, SMJESB also has a 50 per cent stake in the Samarang PSC, a 25 per cent share in the Sabah Ammonia Urea petrochemical plant, and through the acquisition of Sabah International Petroleum Sdn Bhd (SIP) last year, it also has a 10 per cent ownership stake in Petronas LNG9 Sdn Bhd that operates an LNG plant within the Bintulu LNG complexes.

Sabah State Oil & Gas Sukuk Wakalah oversubscribed by 3.9 times

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Sabah State Oil & Gas Sukuk Wakalah oversubscribed by 3.9 times

20 October 2023

KOTA KINABALU, Oct 20, 2023 – SMJ Sdn Bhd (SMJSB), Sabah state’s oil and gas company, successfully launched its inaugural RM900 million Sukuk Wakalah pursuant to its RM10 billion AAA-Rated Multi-Currency Islamic Medium-Term Notes earlier this week.

This inaugural issuance was oversubscribed by 3.9 times, with a book of RM3.5 billion, from a diverse group of investors in Malaysia, and the overwhelming demand reflects their confidence in SMJSB and the Sabah State Government’s strong support for the company.

The Sukuk Wakalah was supported by AmInvestment Bank Berhad (AIBB) as the sole Principal Adviser and Lead Arranger, and as a joint Lead Manager together with Commerce International Merchant Bankers Berhad (CIMB) and Bank  Pembangunan Malaysia Berhad (BPMB).

Sabah Chief Minister Datuk Seri Panglima Hajiji Noor witnessed the signing ceremony to mark the inaugural issuance between Chief Executive Officer Dr Dionysia Kibat, representing SMJSB, and AIBB Head of Debts Market Yeoh Teik Leng, here, today.

Also present were Finance Minister Datuk Seri Panglima Masidi Manjun, who is also SMJSB Chairman, Sabah State Secretary Datuk Safar Untong, Technical Advisor to the Sabah Government-cum-SMJSB Special Advisor Datuk Seri Panglima Lim Haw Kuang, AIBB Chief Executive Officer Tracy Chen and Ambank Business Bank Managing Director Christopher Yap, to mention some.

Describing the programme as a significant milestone for SMJSB, Masidi, in his speech said there are a lot more untapped oil and gas resources in Sabah, and that the State Government, with SMJSB’s help, will achieve greater revenue sharing, greater say and greater participation in the oil and gas development in the state.

Dionysia said the proposed Sukuk Wakalah, which was kicked off in April this year, was assigned the AAA-Rating by RAM Rating Services Berhad, a leading and largest credit rating agency in Malaysia and South-East Asia.

Following this successful maiden issuance, she looks forward to announcing many more deals in the near future.

Meanwhile, in applauding SMJSB for the successful maiden issuance, Tracy said: “This maiden issuance marks a testament of investors’ strong confidence in SMJSB’s financial performance and business outlook. Although SMJ is investing in the hydro-carbon industry, SMJSB continues to partner reputable operators with established and proven environmental, social and governance practices and policies with set targets to reduce greenhouse gas emissions over time.”

SMJSB already has a 50 per cent stake in the Samarang PSC and sold its first sale of crude oil to Shell International Eastern Trading Company in June this year, and a 25 per cent share in the Sabah Ammonia Urea petrochemical plant.

Moving forward, SMJSB is in the midst of acquiring Sabah International Petroleum Sdn Bhd, which holds a 10 per cent ownership stake in Petronas LNG9 Sdn Bhd that operates a LNG plant within the Bintulu LNG complex. Other acquisitions of profitable producing oil and gas assets will also follow.