SAAG Consolidated likely to dilute 51% stake in parent company

Malaysia-based SAAG Consolidated Bhd expects to dilute its 51 per cent stake in its parent company, SAAG RR Infra. The company is currently scouting for a strategic partner.

Addressing a press conference in connection with SAAG RR entering the work over rig services, Anand Subramanian, executive director of SAAG Consolidated, said, "With SAAG RR Infra entering into a new division of oil and gas sector, there is immense opportunity for growth. For further investment requirements, we are open to diluting our 51 per cent holding in SAAG RR Infra."

The parent company has so far invested Rs 10 crore in the Indian subsidiary in the last one year. The board of directors has recently approved SAAG RR Infra to raise Rs 30 crore, which is expected to be a combination of debt and equity.

The new business of providing work over services on offshore platforms, a niche segment, will require large capital. The cost of an oil rig is estimated to be between Rs 50 crore and Rs 120 crore.

R Sriram, managing director of SAAG RR Infra, said, "We plan to purchase an oil rig and for the additional capital requirement, we plan to rope in a strategic investor."

ONGC has 400 offshore oil wells, which SAAG RR Infra plans to tap by offering work over rig services. The contract value of performing these operations is pegged at around Rs 300 crore.

A work over service helps to expand an oil well by mud-logging and removing the particles which fall into the well during expansion called fishing. With offshore platforms and wells in India being over 25 years old, these require restoration and enhancement with remedial treatment. Further, the oil prices are attractive and the oil companies are focused on enhancing their production capabilities of their existing assets, he said.

SAAG RR Infra has signed a technology transfer agreement with SAAG Drilling and Well Services Sdn Bhd for the engineering, construction and deployment of modular electric work over rig.

Abdul Sani Yatim, chief operating officer of SAAG Drilling and Work Over Services, said that the company will impart its expertise to prepare and usher SAAG RR into this highly polarised segment in the oil and gas industry.

The company has restructured and consolidated the existing infrastructure business and is now ready to launch itself in the oil and gas industry, Sriram added.

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Readying for a new mission

SAAG RR Infra has so far invested Rs 10 crore in the Indian subsidiary in the last one year. It would raise Rs 30 crore through a combination of debt and equity

The company plans to purchase an oil rig and for the additional capital requirement, it would rope in a strategic investor

It has signed a technology transfer agreement with SAAG Drilling and Well Services Sdn Bhd