Sumatec boosts confidence in oil and gas investments

Despite the oil and gas industry's high-yield potentials, some investors are wary of putting their stake in the volatile industry. Sumatec Resources has found a way to reduce the uncertainty in investing in the oil and gas sector. The company employs a two-pronged approach - transforming the company from a downstream to an upstream player and tapping mature assets with proven reserves.

Formerly a fabrication company building terminals and pipelines, Sumatec restructured its operations to focus on oil and gas production. Its downstream operational background will help it prepare potential assets for optimum production. "All our revenues will come from oil and gas - from our own business and assets. We remove the unpredictability in winning bids and securing revenues. We can commercialise our own organic asset base," CEO Chris Dalton says.

Sumatec taps mature assets with long-term sustainable growth. In a joint-investment agreement with Markmore Energy and CaspiOilGas, Sumatec has found the ideal asset in the Rakushechnoye oil and gas field in west Kazakhstan.

To fund its Rakushechnoye oil field activities, Sumatec raised US$142.8 million from 2.7 billion rights shares issued in November last year. The field yields different types of hydrocarbon, such as oil, gas and condensate. It has an equivalent of 333 million barrels of oil equivalent (boe) of three proved, probable and possible oil reserves, of which gas reserves are 257 million boe.

Sumatec is driving towards becoming an international player through partnerships with energy companies from the region, specifically China. Collaboration opportunities are opening with a Kazakhstan to China pipeline. The company is constantly on the lookout for potential assets to acquire.

"We would like to work with companies that have mature assets in their portfolio that complement ours," Dalton says.