KUCHING: Sona Petroleum Bhd (Sona Petroleum) listed successfully on the Main Market of Bursa Malaysia Securities Bhd (Bursa Securities) and officially commenced trading under the stock short name SONA and stock code 5241 at the opening of trading at 9am yesterday morning at an opening price of RM0.41 with a trading volume of 16.8 million.
Its free detachable warrants (warrants) also began trading under the stock short name SONA-WA and stock code 5241WA at an opening price of RM0.24 with a trading volume of 31.4 million.
As at 4.50pm yesterday, Sona Petroleum saw its shares increase slightly by 0.2 sen to 44.5 sen with its highest trade being at 45 sen earlier yesterday. Its warrant, however, saw a robust jump of 18.5 sen to 26 sen.
“The demand for Sona Petroleum’s shares has been overwhelming and we are pleased to have a good mix of local and international institutional investors.
“This is the first special purpose acquisition company (SPAC) in Malaysia with a cornerstone and the Ministry of International Trade and Industry (Miti) tranche offered as part of the Institutional Offering. We would like to thank our investors for their confidence in the management of Sona Petroleum.
“Our team is committed to growing the company and we seek to continuously increase the value for our shareholders through our upcoming venture in the exploration and production (E&P) phase of the oil and gas value chain.
“As a listed entity, we are now responsible towards our shareholders and we seek to ensure good corporate governance,” Sona Petroleum’s independent non-executive chairman, Andreas Johannes Raymundus van Strijp said at the listing ceremony.
The retail tranche of Sona Petroleum’s initial public offering (IPO) was oversubscribed by approximately 4.97 times and had generated a demand of RM421.0 million.
Overall, the company has successfully raised a total of RM550 million in the Retail and Institutional Offering through the public issue of 1.1 billion new ordinary shares of RM0.01 each, together with warrants on the basis of one warrant to every one public issue Share, at an issue price of RM0.50 per public issue share.
The implied market capitalisation is approximately RM705.4 million upon listing. Sona Petroleum IPO is the largest SPAC in Malaysia based on the fundraising size.
Sona Petroleum will set aside 90 per cent of the proceeds raised from the IPO to complete its Qualifying Acquisitions. The remaining of the IPO proceeds will be utilised for working capital within 36 months from the listing and listing expenses.
Elaborating on the promising prospects of the oil and gas industry, Andreas said, “According to an Independent Market Research report, demand for oil and gas over the past 30 years have seen a significant increase, and this trend is expected to continue with escalating population growth and industrialisation in emerging economies expected to contribute to a 36 per cent growth in global total energy demand between 2011 and 2030.
“Additionally, E&P capital expenditure is projected to surpass the US$670-billion mark in 2013 despite lower gas prices and the challenging macroeconomic situation in Europe and North America.”
Currently, CIMB Investment Bank Bhd (CIMB) and RHB Investment Bank Bhd (RHB) are the Joint Principal Advisers, Joint Placement Agents and Joint Managing Underwriters for Sona Petroleum.
CIMB and RHB also act as the Joint Underwriters together with Kenanga Investment Bank Bhd and MIDF Amanah Investment Bank Bhd for the retail offering.
PETROLEUM exploration in Malaysia started in Sarawak when oil was
first discovered in 1909 and first produced in 1910. Malaysia has the
world’s 25th largest oil reserves and the 14th largest gas reserves. The
oil and gas (O&G) industry is a complex and high risk field due to
the location of its operations and proximity to hazards (Ken-Worgu
2011).
The Piper Alpha incident saw the destruction of an entire
oil platform from fire and explosion, killing 167 people within 22
minutes. The Deepwater Horizon oil spill in the Gulf of Mexico in April
2010 killed 11 people and 4.9 million barrels of oil were discharged
into the sea —- the largest oil spill ever. Both incidents indicate that
accidents in the O&G industry can have catastrophic effects on
people, the environment, assets and reputation.
In general,
O&G projects take several years to complete and involve large
capital outlays. Some are considered mega projects, due to the huge
magnitude, high costs and significant number of interfaces,
interdependencies, complexity, and risks (Jergeas 2008).
The use
of time, cost and quality as indicators of project success have been
applied to almost every industry. However, the inclusion of health,
safety and environment (HSE) as a success factor in O&G projects has
not been investigated; neither has it been included as part of project
management models despite its big impact to the industry.
HSE
involves protecting the health and welfare of people and the environment
from adverse impacts due to human and industrial activities. It refers
to a holistic approach of managing workplace hazards. Health and safety
are defined as the degrees to which the general conditions promote the
completion of a project without major accidents or injuries (Bubshait
and Almohawis 1994; Ali and Rahmat 2010).
Research such as DeWit
(1988) make two distinctions for project success (Prabhakar 2008). The
first is between project success (measured against the overall
objectives of the project) and project management success (measured
against the widespread and traditional measures of performance against
cost, time and quality).
The second distinction is the difference
between success criteria (the measures by which success or failure of a
project or business will be judged) and success factors (those inputs to
the management system that lead directly or indirectly to the success
of the project or business).
Murphy et al (1974) is the most
authoritative research in the area of project success factors. This
research outcome has a high level of agreement with the project success
definition provided by Baker et al (1988) that project success is a
matter of perception and that a project will most likely be perceived as
an “overall success” if it meets the technical performance
specifications and/or mission to be performed, and if there is a high
level of satisfaction concerning the project outcome among key people on
the project team, and key users or clientele.
As part of our
research into HSE management as a success factor in addition to time,
cost and quality factors, a quantitative study was undertaken with the
administration of a questionnaire to project engineers and managers from
major O&G companies in Malaysia. A total of 223 responses were
received.
In the study, quality was ranked the most significant
factor of project success. O&G companies define quality on more
technical aspects and contractors, vendors and service providers who
accomplish these requirements are deemed to have achieved quality in
their deliverables.
Cost is the second most influential factor. It
plays an important role in the success of a project (Atkinson 1999),
which is why cost management and prevention of cost overruns is taken
into serious consideration. This could be because O&G projects are
usually mega projects with huge budgets and these costs have to be
managed prudently.
Time ranks third in significance because
scheduling is always an objective in most projects. However, unlike cost
which can be reduced through various initiatives, it is very difficult
to reduce time when running a project. It is usually unplanned
circumstances such as bad weather, natural disasters or political
instability which are not within the control of the project team, that
lead to possible delays.
HSE is the least significant variable
although the importance of HSE management is acknowledged during the
execution of the project – integration of HSE in design, compliance to
HSE legal and company requirements, management of HSE contractors and so
on.
HSE is rarely placed as one of the criteria to measure
project success. At the end of a project, when it is evaluated for
success or failure, HSE performance is not accounted for, leading to the
view that HSE is not key to project success.
But when there are
no criteria for HSE, the outcome of HSE performance has very little or
no influence on project success. Therefore, evaluation on a completed
project might reveal that HSE is not significant to project success
especially since HSE is not a criterion set upfront.
The finding
that quality, cost and time are key components of project success also
corresponds with the findings by Baccarini (1999).
Although HSE is
not considered influential to project success, there is no agreement on
what constitutes project success as iterated by past studies from
Murphy et al. (1974), Pinto and Slevin (1988), Gemuenden and Lechler
(1997) and Shenhar et al (1997).
Therefore, time, cost and quality
may not be the only factors that lead to project success. The study
believes that there are other factors which can impact project success
which have yet to be researched.
Kulvinder Kaur is an
environmental management executive with a major oil and gas company in
Malaysia who completed her Master of Project Management at Curtin
Sarawak and graduated in April.
Dr Anbalagan Krishnan is Accounting Department head and senior lecturer at Curtin Sarawak’s School of Business.
