Cahya Mata Sarawak Berhad : CMS ventures into energy sector with the acquisition of Scomi Energy’s oilfield group

Kuching (Sarawak), Thursday, 17 March 2022 - Cahya Mata Sarawak Berhad ("CMS" or "the Group") is pleased to announce that two of its subsidiaries, Cahya Mata Oiltools Sdn Bhd ("Oiltools") and Oiltools International Sdn Bhd ("Oiltools International"), today entered into four (4) conditional sale and purchase agreements ("SPA") with Scomi Energy Services Berhad ("Scomi Energy") to acquire Scomi Oilfield Ltd ("Oilfield") together with various companies¹ and assets within the Oilfield Group of Companies ("Oilfield Group") for a total purchase consideration of RM21.0 million.

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.

Scomi Energy, via the Oilfield Group, is one of the top five global providers of drilling support services and products for the oil and gas industry. It offers drilling fluids services and drilling waste management services. Scomi Energy has a presence in 15 markets across Asia, Middle East, Europe and Africa with an ongoing order book.

The CMS management expects to leverage Oilfield Group's global presence to expand the Group's clientele and serve as a bridge for the expansion of its existing businesses into the markets where the Oilfield Group has a presence.

The Group's push into sustainability as a business strategy will benefit from Oilfield Group's waste management services business and this business is expected to grow due to increasing drilling activity as crude prices remain elevated. The additional benefit from the proposed acquisitions is that the Group will not take on additional debt while drilling and waste management services are asset-light businesses. The asset light structure will be the core business operating model for future growth.

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.

The first SPA is for the acquisition of Oilfield and its nine subsidiaries as well as a 48% equity interest in Scomi KMC Sdn Bhd ("Scomi KMC") from Scomi Energy for a cash consideration of RM13.5 million. The second SPA involves Oiltools International acquiring from Scomi Oiltools Sdn Bhd (Receiver & Manager appointed) ("SOSB") a 4% equity interest in Scomi KMC, 25% equity interest in Scomi Oiltools Gulf W.L.L. and 25% equity interest in Continental Wire Cloth (Malaysia) Sdn Bhd (formerly known as Global Oilfield Products Sdn Bhd) for a cash consideration of RM2.6 million. Through the first and second SPAs, Oiltools will hold 52% equity interest in Scomi KMC.

The third SPA is for the acquisition of a 5-storey shop office located in Dataran Prima, Petaling Jaya, Selangor by Oilfield International from SOSB while the fourth SPA is for Oilfield International's acquisition of the inventory and equipment from SOSB for a total cash consideration of RM3.0 million and RM1.9 million respectively.