Loyz Energy

Loyz Energy: is looking to focus all its resources on strengthening its position in the oil & gas exploration and production (E&P) segment as an independent player, after successfully completing the $9m sale of its sanitary ware unit, previously held under its unit Sim Siang Choon Hardware. Loyz now plans to kick- start O&G E&P activity in early Apr, starting with the drilling of its first well in North Dakota, USA (out of 10 wells), and activating gas production at the Baola field in Gujarat, India. After this, Loyz plans to start operations in Colorado. The initiatives fall under a participation-and-exploration agreement inked in Aug 2012 with Rex Oil & Gas Ltd and Norway- based Fram Exploration to develop the latter's leases in North Dakota and Colorado. Its gas production project in India, on the other hand, is a result of a sale-and-purchase agreement, sealed in Jan 2013 through its 51% -owned Mumbai-listed unit, Interlink Petroleum. Under the agreement, Loyz's unit is to supply 5,000 standard cubic metres per day of natural gas from its Baola field for an initial 5-year period, with an option to extend the contract in blocks of 2 years each. Mgt says the assets are expected to contribute to group revenue and cash flow starting from 4QFY13. Adds that the group is in the midst of finalising a petroleum service contract for Area 14 in the East Palawan Basin, off the shores of the Philippines, with the country's Department of Energy, following its contract win two months ago. Separately, the group also announced a series of mgt changes. Mr Adrian Lee was promoted to MD, while Mr Sim Siang Choon (formerly MD and ED) was redesignated to a non-executive director. Mr Sim remains company chairman. Kwan Weng Kwong has also been redesignated as a non-executive director, from CEO and executive director. Kwan Lin Siew has resigned as alternate director of Mr Sim and Yip Chee Meng has resigned as executive director. Loyz's shares rose 1.4% to close at 37.5 cents yday; this translates to 2.35x P/B. P/E is not meaningful due to FYJun12 losses.