Plexus Holdings has entered into a Framework Agreement with Yantai Jereh Oilfield Services Group Co., Ltd. (Jereh) and the two parties will now work together to formalise a binding license agreement to enable Jereh to manufacture and sell Plexus’ wellhead equipment to the Chinese and wider Asian oil and gas markets.
Jereh is a public company listed on the Shenzhen stock exchange with a market capitalisation of over US $5.8bn and 5,000 employees.
The agreement remains subject to legally binding agreements being finalised and signed. The binding agreements will include the following terms:
– Plexus will grant to Jereh an exclusive licence in China and other designated Asian territories to enable Jereh to manufacture and supply Plexus’ products utilising Plexus’ trademarks, patents, technology, know-how, engineering, standards and other intellectual property and technical services of Plexus.
– Jereh (or a wholly-owned affiliate of Jereh) will subscribe for new ordinary shares in the company, such that Jereh would be interested in 5 per cent. of the enlarged issued share capital of Plexus, at a price of 180 pence per share (this being a premium to the price at the time the parties started discussions regarding the proposed licencing licensing agreement); and for a period of twelve months from the date of issue of the new ordinary shares pursuant to the subscription, will retain the right to subscribe for further new ordinary shares in the company such that Jereh would become interested in 10 per cent. of the enlarged share capital of Plexus at a price the lower of: (i) 200 pence per share (this being a premium to the price at the time the parties started discussions regarding the proposed licencing agreement); and (ii) the closing price on the date on which Jereh notifies the company of its intention to exercise the option.
– Jereh would have the right to appoint a non-executive director to the board of Plexus, subject to regulatory requirements.
Completion of the proposed transaction requires, inter alia, additional due diligence to be carried out by both parties and remains subject to further negotiation and final documentation (including the subscription agreement and technology licence agreement).
The signing ceremony and announcement was jointly made by Kunxiao Wang, President and Co-founder of Jereh, and Ben van Bilderbeek, the inventor of POS-GRIP technology, CEO and founder of Plexus at the 15th China International Petroleum & Petrochemical Technology & Equipment Exhibition 2015 (CIPPE) in Beijing, which runs from the 26th to 28th of March (Beijing Oil Show).Jereh is currently exhibiting at the Beijing Oil Show, and as part of the initial collaboration between Jereh and Plexus, the Plexus wellhead R&D Model 13 ½ 10M POS-GRIP Exploration Wellhead System, with stand and tensioners, has been shipped from Plexus Malaysia and is being jointly displayed on the Jereh stand. The Beijing Oil Show extends over 90,000 sq. metres and attracts 1,800 exhibitors from 65 countries and regions, 16 international pavilions and 65,000 professional visitors.
Plexus’ CEO, Ben Van Bilderbeek, said: “I am delighted that Plexus and Jereh have entered into the Agreement which we hope will enable us to bring Plexus’ POS-GRIP technology to the important and growing Chinese market and other relevant Asian territories. We view China and Asia as one of the key global market opportunities for Plexus, and we believe that our POS-GRIP wellhead equipment will deliver operational time savings and safety benefits to the oil & gas companies operating in the region, many of whom will be facing high pressure/high temperature (‘HP/HT’) conditions which POS-GRIP technology is uniquely suitable for, and which has resulted in Plexus supplying wellhead equipment for the majority of HP/HT jack-up wells in the North Sea region.
“The progress we have made to date in our discussions with Jereh is an example of how Plexus continues to extend its geographic reach and we are continuing to see new enquiries from across the globe from operators that are considering POS-GRIP technology. Such progress, and the growing support of our existing and new customers is centred around the principal that we can ensure long-term safety over the lifetime of a production well and beyond. We offer the only wellhead design that can provide a convenient releasable engagement of the casing hanger to the wellhead bore, instantly providing a metal interface seal, which is based on the same principles and performance as those employed in premium couplings design. This remotely delivered and calibrated force eradicates destructive seal movement, and protects seal integrity.
“Plexus has already supplied Shell China with HP/HT POS-GRIP wellhead equipment for an exploration well offshore Hainan Island and we hope to increase our activity in this region. I would like to extend my appreciation to Chairman Sun for the way Jereh and his team have conducted these discussions, and I look forward to finalising the definitive agreements, and working with Jereh over the coming years.”
Kunxiao Wang, President and Co-founder of Jereh said, “We are pleased to announce this alliance with Plexus, which can be a milestone for Jereh entering into the subsea market. Plexus provides unique wellhead system technologies with a strong commitment to make the oil and gas industry much safer and efficient. We are glad to be able to work with such an outstanding partner. By integrating Plexus patented technology and Jereh manufacturing and marketing capabilities, we believe the alliance will create significant influence in the offshore and subsea field and create compelling benefits for customers around the world.”