Kencana Petroleum Bhd's wholly-owned subsidiary Kencana Petroleum Ventures Sdn Bhd (KPV) has proposed to acquire all equity interest in Mermaid Kencana Rig 1 Pte Ltd (MKR1), Kencana Mermaid Drilling Sdn Bhd (KMD) and Mermaid Kencana Rigs (Labuan) Pte Ltd (MKR Labuan) held by Mermaid Drilling (Singapore) Pte Ltd.

In a filing to Bursa Malaysia, the company said it has executed three separate conditional sale and purchase agreements for the proposed acquisition.

In addition to the purchase cost for MKR1, KMD and MKR Labuan totalling US$43.650 million, KPV shall also pay to Mermaid Drilling US$22.950 million for settlement of intercompany loans and other debts in the companies.

Accordingly, the total cost of the proposed acquisition will be US$66.60 million, and it is to be financed by borrowings and/or internally generated funds, Kencana Petroleum said.

The proposed acquisitions will increase Kencana Petroleum Group''s involvement in the drilling rig operations business in line with the group's plans to expand its recurring income and to secure businesses with higher margins.

It would also result in Kencana Petroleum Group becoming the only Malaysian group with a wholly-owned offshore drilling company. -- Bernama