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Reach gets OK to buy stake in oil and gas field in Kazakhstan


Our target is to complete the proposed qualifying asset (QA) purchase by the end of this month. The last milestone for the proposed QA to go through was obtaining approval from Reach’s shareholders,” managing director and chief executive officer Shahul Hamid Mohd Ismail (pic centre)) said after Reach’s EGM yesterday.

Our target is to complete the proposed qualifying asset (QA) purchase by the end of this month. The last milestone for the proposed QA to go through was obtaining approval from Reach’s shareholders,” managing director and chief executive officer Shahul Hamid Mohd Ismail (pic centre)) said after Reach’s EGM yesterday.

KUALA LUMPUR: Reach Energy Bhd , which has received overwhelming support from shareholders for its proposed maiden acquisition, hopes to complete the deal by the end of this month.

During its adjourned EGM yesterday, Reach received 81.07% approval from its shareholders to buy a stake in an oil and gas (O&G) field in Kazakhstan.

With this, Reach would graduate from its special-purpose acquisition company (SPAC) status to become a full-fledged exploration and production O&G company listed on the Main Market of Bursa Malaysia. “Our target is to complete the proposed qualifying asset (QA) purchase by the end of this month. The last milestone for the proposed QA to go through was obtaining approval from Reach’s shareholders,” managing director and chief executive officer Shahul Hamid Mohd Ismail (pic) said after Reach’s EGM yesterday.

Reach was seeking shareholders’ approval to purchase a 60% stake in Palaeontol BV, which is the owner of the onshore O&G field named Emir-Oil LLP in Kazakhstan for US$154.9mil (RM638.2mil).

Emir-Oil has four producing fields, coupled with two development fields and six drillable prospects.

“It has been a very long journey for us... the hard work starts now,” Shahul said.

The total voting shares of Reach amounted to 975.63 million votes. About 791 million shares held by 429 shareholders, which represent 81.07% of the total votes, approved the Emir-Oil acquisition. While 220 shareholders holding 184.7 million shares or 18.93% voted against the proposal.

Reach was the second SPAC to gain support from shareholders after Hibiscus Petroleum Bhd .

“Our operatorship and management of the asset will be phased in over the next six months, from our vendor into Reach,” Shahul said.

He added that the company spent about two years looking into some 40 assets before deciding on Emir-Oil.

“We have gone to great lengths to demonstrate that the asset is one that is of immense value.

“Much of the information on the asset was readily available to investors as we purchased it from a reputable listed company.

“I think many of our investors saw the value in Emir-Oil,” he explained.

In the two weeks leading to the adjourned EGM, Reach had engaged with its investors to enhance their understanding on the exploration and production industry and the asset.

Apart from that, Shahul sees positive signs in the O&G market, despite near-term uncertainties in the market due to the US election, which he deemed as temporary.

“I believe that the oil price is showing signs of recovery and the Organisation of the Petroleum Exporting Countries members are more than determined to bring it (oil price) under control.

“Besides that, our revenue is derived in US dollars, so the strengthening of the US dollar augurs well for us.

“Coupled with rising demand for petroleum, I see positive times ahead,” said Shahul.

Shares in Reach fell by 6.3% to 66 sen at yesterday’s close. On the other hand, its warrants spiked 23.1% to eight sen.

“On behalf of the company, I am truly delighted and thankful to have the shareholders’ support and approval for the proposed acquisition.

“I hope that our success will open more eyes and be the catalyst for more exploration and production companies to list here on the local bourse,” said Shahul.

Shareholders also passed the ordinary resolution for the proposed placement of new ordinary shares of one sen each in Reach to raise gross proceeds of up to RM180mil.

The proceeds raised will be mainly used to settle the remaining completion amount and partial payment of the deferred consideration in relation to the proposed acquisition.

The acquisition of Palaeontol BV is expected to immediately contribute positively to the company’s revenue.

Shahul said several Reach staff would be deployed on site in Kazakhstan working alongside the local team, although most will be based in Malaysia.

   

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