Global Investment House (Global) announced that it will be managing the capital increase of Kuwait Energy Company KSCC (KEC) to 50 million Kuwaiti Dinars in order to benefit from the vast investment opportunities that have been available in the oil and gas sector in the Middle East, Africa and Central Asia region.
Omar El-Quqa, Executive Vice President at Global commented that the increase in the paid-up capital will result in the issuance of 490 million shares at 109.5 fils per share for those interested in the energy sector. He added that the company has strategic plans and potential and a very experienced management team in the oil and energy sector.
In addition, Mr. El-Quqa added that the company will be listed on the Kuwait Stock Exchange after completing three years since establishment and will have a secondary market for those wishing to exit the secondary market prior to the listing.
Mr. El-Quqa emphasized that the company will focus its operations in the Middle East initially and in Central Asia. KEC has performed an extensive analysis of available potential opportunities in some countries in the region combined with an understanding of the business environment and knowledge of the respective petroleum and fiscal systems. The focus countries identified by KEC include Egypt, Syria, Oman, Yemen, Iran, Iraq and Kazakhstan.
KEC is undergoing discussions with various organizations, corporations and Government authorities for acquiring Oil and Gas assets. These discussions are at various stages of progress, with at least four projects, for which in-principle agreement has been reached with the counterparties.
Mr. El-Quqa added that the total investments are expected to be in the range of KD70mn to KD75mn. In addition to these, KEC is pursuing more acquisition targets out of which investment opportunities of ~KD100mn are expected to materialize over next 2-3 years.
KEC is expected to be profitable from first year, at gross, operating as well as net levels. It is expected to pay dividends from Year 1 onwards. The Management of KEC has been diligently screening for various assets so that all investments made by KEC yield IRRs of at least 20%.
KEC was established in August 2005 and it envisions becoming the pre-eminent Middle East-based independent oil and gas company, and to achieve production of 50,000 BOE/day with net reserves of 300 million BOE by 2010. The company will acquire US$300 million in its acquisition and exploration program with the aim of obtaining an internal rate of return of up to 20% on capital invested.
It will achieve its goal by an aggressive acquisition program by leveraging the management’s established network and value-added expertise. KEC’s focus is to profit from economically and technically sound oil and gas properties through Joint Ventures with selected successful partners.
KEC is being led by Mrs. Sarah Akbar as the CEO, who is a well known figure in the oil industry in Kuwait and internationally. She is a petroleum engineer with 25 years of experience in upstream operations. She is complemented by other experienced professionals including Dr. Abdul Samee Bahbahani as the COO. Dr. Bahbahani has a PHD in petroleum geology with 29 years experience He has worked on different oil companies like Arabian Oil Company and KUFPEC.
For the last several decades, oil and natural gas have been the most popular energy sources in the world and no competing substitute is still able to pose a serious threat to their dominance in the foreseeable future.
The recovering economies in the West and the exceptional growth in Asia are pushing for an increased dependence on oil and other energy sources. Strong demand and tight supply of oil have increased the prices of oil significantly in the last several years. This demand/supply imbalance should also provide for a strong support for prices in the short to mid-term.
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