Asian Energy

Asian Energy Services Limited announced the Board's approval for the merger by absorption of Oilmax Energy Private Limited. This strategic move aims to create a larger, stronger, and integrated entity, positioning it to bid for large, integrated projects across field development, O&M, well drilling, and related services. The merger combines Oilmax's asset ownership (producing and development fields in Assam, Gujarat, and a CBM block) with Asian Energy's technical and project execution expertise in seismic, EPC, and enhanced recovery. The combined entity is expected to have a net cash balance sheet, strong EBITDA margins, and healthy ROCE/ROE for FY25 pro forma.

The merger strategy is further bolstered by the recent completion of the acquisition of Kuiper Group, a UAE-based oil and gas service company, earlier in September 2025. Kuiper Group's operations across the Middle East and Southeast Asia are expected to open up opportunities for the combined entity to expand integrated projects and O&M services across international geographies. Management anticipates business aspects to improve within 6 months to 1 year due to this acquisition, leveraging Kuiper's reputation and operational footprint.

Asian Energy recently secured a significant INR865 crores order from Vedanta for the full field development plan of a field. This contract exemplifies the successful integration of Oilmax's subsurface modeling and drilling expertise with Asian Energy's proven O&M services. Management highlighted this as a 'highly optimized model,' suggesting it is a replicable strategy for future large contracts and positions the combined entity as a leader in integrated service offerings.

Oilmax Energy's portfolio includes producing assets such as the Amguri field in Assam, currently yielding 220,000 cubic meters of gas per day and 300 barrels of condensate. The Indrora field in Gujarat is producing about 100 barrels of oil per day, with a drilling campaign planned within the next month. Development is also underway for the Duarmara and Tiphuk fields in Assam, with production expected later in the year. Efforts are focused on connecting Assam fields to the Indradhanush Gas Grid to resolve gas bottlenecks and ramp up production significantly.

The merger is structured with a swap ratio of 117 shares of Asian Energy for every 10 shares of Oilmax, with Oilmax's existing 60.83% (55% fully diluted) shareholding in Asian Energy to be canceled. Management emphasized that Oilmax is a 'negative working capital business' and a 'cash-rich company,' which is expected to reduce the combined entity's working capital days and significantly improve its financial position. The valuation, conducted by an independent SEBI-registered valuer using DCF and market-based approaches, was defended as 'very conservative' and 'more favourable to the Asian retail shareholder' despite analyst concerns about a 50x trailing earnings multiple.

Management noted a supportive policy environment, including the unlocking of CRZ areas for E&P and the Oilfield Regulations and Development Act (ORDA), which provides fiscal guarantees and stability, enhancing sector attractiveness. However, the recent increase in GST rates for the oil and gas industry from 12% to 18% presents a challenge for field ownership, as oil and gas are not covered under GST, necessitating strategic optimization. For service contracts, the GST increase is cost-neutral as clients bear the cost, and the merger is expected to help plug inter-company GST leakages.