SINGAPORE - Loyz Energy announced a new controlling shareholder and strategic changes to its board of directors and its management team which the upstream energy group said will "enable it to better weather the current challenging environment in its upstream oil and gas business."
Wave Link LP, an existing shareholder of the company, has entered into a sale and purchase agreement with Jit Sun Investments Pte Ltd, Loyz's largest shareholder, to acquire an additional 9.85 per cent stake in Loyz from Jit Sun.
The acquired shares will be transferred in two tranches, with the first in May 2016 and the second before August 2016, said Loyz in a filing with the Singapore Exchange on Wednesday (May 11).
Following completion of the acquisition, Wave Link will become the company's second largest shareholder with an aggregate 16.7 per cent interest. Jit Sun will remain the largest controlling shareholder of the company, holding a 17.18 per cet stake and will continue to provide financial support where necessary, said Loyz.
Wave Link is an investment fund which focuses on investments in certain core sectors, including the oil and gas sector.
A representative from Wave Link said, "The fundamentals of Loyz Energy's upstream oil and gas business are very sound, taking into account their proven oil reserves, low cost of production and potential to scale-up quickly. All they need is strong support to enable them to ride through this temporary storm in the oil and gas sector".
As to board changes, Loyz said former chief financial officer Jeffrey Pang has been appointed CEO to replace Mr Adrian Lee, managing director, who has been appointed non-executive director on the board. Mr Pang has also been named as executive director.
Loyz said Mr Pang has headed the finance function of the group since 2011 and has spent a considerable part of his career in the oil and gas sector. Over the last few years, Mr Pang has also been actively involved in the planning and execution of operational strategies for the group and has worked extensively with its partners, the company added.
Lead independent director William Teo, who currently chairs the audit committee, has been appointed the new chairman, replacing Simon Charles Lockett who stepped down but will continue to contribute as an advisor to the board.
Loyz said Mr Teo brings with him an extensive network and more than two decades of valuable experience in the areas of corporate finance and mergers and acquisitions.
Mr Chan Eng Yew and Mr Chia Yong Whatt will relinquish their respective roles as non-executive director and independent director.
Loyz last week posted a net loss of US$18.2 million ($24.9 million) for its third quarter ended March 31, compared with earnings of US$100,000 a year ago, as revenue fell 62 per cent to US$1.8 million.
Newly-appointed CEO Jeffrey Pang said, "Our immediate focus is to improve our cash flows and ensure we can operate smoothly even when oil prices are at the current low levels. With our substantially reduced operating costs, we are in a good position to benefit when oil prices rise.
"There is significant untapped potential in our Thailand fields. Low drilling and operating costs imply significant potential to increase production and potentially reserves, thereby boosting the value of our fields and company for the benefit of shareholders.
"Our non-core assets will be divested as we continue to look for strategic options to create more value for our shareholders. Taking a conservative view, we have also fully impaired the value of the investments made on non-core assets, even though we believe there will be some value generated when the assets are divested."
Loyz's key asset is its stake in the Thailand oil fields in the Phetchabun Basin. Loyz said on Wednesday tht operations there are running smoothly, with production output of 4,200 barrels per day.
It said that with an average production cost of around US$11 per barrel achieved by targeted cost controls, its business is fundamentally strong and cash flow positive.