28 Dec 2021 06:41

Market Update: Tuesday 21 December 2021

 

Rex International Holding* (5WH SGX): Lime closes Brage acquisition, Norway

 

Rex International Holding* (5WH SGX): Lime closes Brage acquisition, Norway
Share price: SGD 0.26, Market Cap: US$348m
STRONG BUY &ndash SGD 0.62 TP

 

&bull Rex has confirmed that its 90% subsidiary, Lime Petroleum, has received approval from the Norwegian authorities, for its acquisition of 33.8434% of the Brage Field.
&bull With this approval, the acquisition is expected to be completed by 31 December 2021.
&bull The effective date of the acquisition, upon completion, will be deemed to have taken place on 1 January 2021, as is the norm for transactions in the Norwegian Continental Shelf.

Our take: The rise in oil prices will have a positive effect on the Brage transaction adding c.3,440boepd net to the Rex&rsquo s current oil production in Oman and Lime Petroleum&rsquo s (Rex 90% WI) revenue from its share of production from the Brage Field, with effect from 1 January 2021. This will be added to Rex&rsquo s books for the financial year ending 31 December 2021. Significantly, we also note that Lime&rsquo s deferred tax assets and tax refund receivables will total c.US$77m. Underlining the swift pay back metrics for this transaction, for FY20 at subdued commodity pricing, Brage yielded c.US$21m of net profit from its 33.84% interest in the Brage Field. Our valuation of Lime&rsquo s interest in the Brage Field infers a risked value of c.US$134m.

*SP Angel acts as Corporate Broker to Rex International Holding