KUCHING: Dayang Enterprise Sdn Bhd (DESB) has been awarded a contract extension for the provision of Pan Malaysia maintenance, construction and modification (PM-MCM) from Mubadala Energy (SK320) Ltd (formerly known as MDC Oil & Gas (SK320) Ltd).
The contract was first awarded to the wholly-owned subsidiary of Dayang Enterprise Holdings Bhd (Dayang) on Dec 9, 2020 and its primary term remained in force until July 16, 2023.
“The contract extension duration is approximately one year and five months and 15 days commencing from July 17 2023 until Dec 31 2024,” Dayang said in a filing with Bursa Malaysia.
The value of the contract extension is based on work orders issued by Mubadala Energy throughout the extension period.
“Risk factors affecting the contract include execution risks, such as availability of skilled manpower and materials, changes in prices of materials, changes in political, economic and regulatory conditions.
“DESB shall ensure strict compliance with the safety and operational procedures in the execution of contract requirements,” said Dayang.
The latest contract extension was the second contract win announced by DESB within a week. On Thursday, Dayang said DESB had been awarded a contract for the provision of Rectification Works and Associated Services for Asset Integrity Findings-Package A-Sarawak Oil Asset (SK Oil) from Petronas Carigali Sdn Bhd.
The duration of the contract is from Dec 15, 2023 for three years.
Meanwhile, WTK Holdings Bhd said it has completed the acquisition of 70 per cent equity interest in Durafarm Sdn Bhd for RM132.2 million cash on Jan 5, 2024 following the full settlement of the purchase sum.
On Aug 11, 2023, WTK’s wholly-owned subsidiary BioFarm Venture Sdn Bhd entered into a conditional share sale agreement with Ocarina Development Sdn Bhd to acquire 8.8 million shares (70% stake) in Durafarm. With the completion of the acquisition, Durafarm is now a 70%-owned subsidiary of BioFarm Venture.
This was the second major acquisition after WTK group completed the purchase of oil palm company BHB Sdn Bhd for RM237.5 million and an oil palm mill for RM12.5 million cash in May 2023.
Durafarm is principally engaged in the business of planting and management of oil palm plantations in Betong and Sri Aman, with the principal market for the sale of fresh fruit bunches (FFB).
The main assets of Durafarm comprise of 19 parcels of plantation land measuring a total of 5,040.97 hectares (plantation estate), of which 4,010.57 hectares have been fully plantation with oil palm trees and another 867.31 hectares are under development for planting.
The acquisition of Durafarm has boosted WTK group’s planted oil palm area by 4,010.57 hectares to 20,439.07 hectares from 16,428.5 hectares or an increase of 24.41 per cent. The Durafarm plantation has a young group profile with about 66.8 per cent of the palm trees having an age profile of less than three years.
“Durafarm’s oil palm yields are poised to improve further and the growth momentum in Durafarm’s revenue and earnings is expected to continue in the future financial years.
“It is also pertinent to note that 867.31 hectares of the plantation estate have already been cleared and has been earmarked for planting by end of 2023. This would increase the total planted area further, from 20,439.07 hectares to 21,306.38 hectares,” according to WTK in its proposed acquisition of Durafarm announcement last August.
WTK said as these immature and young oil palm mature, their yields will start to increase rapidly. The typical lifecycle of an oil palm runs from 25 to 30 years with peak production cycle and yields recorded during their prime mature and mature stages from nine to 18 years.
As such, WTK said the medium-to-long term prospects of Durafarm plantation estate is favourable as the group will stand to benefit from revenue and profit contributions from Durafarm as and when the planted oil palm mature and enter peak FFB production cycle.
According to WTK, the acquisition of BHB and Durafarm are in line with the group’s long term strategy to further expand its oil palm plantation business to buy new land banks to gain a larger foothold in the country’s palm oil industry.
This will expedite the group’s strategic shift to become a more dominant plantation player while reducing its reliance on the timber business which has continued to face challenges.
These challenges include the declining number of available natural logs, stricter operation requirements related to timber certifications and softer demand from importing countries.
