Reach Energy buys Kazakhstan oilfield stake for RM638m

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KUALA LUMPUR (March 7): Reach Energy Bhd is acquiring a 60% stake in Kazakhstan's Emir-Oil Fields for US$154.9 million (RM638.2 million). Emir will be Reach Energy's first hydrocarbon asset.

In a filling with Bursa Malaysia, Reach Energy said it was buying a 60% stake in Netherlands-based Palaeontol BV, which owns 100% of Emir.

Palaeontol BV is wholly-owned by Palaeontol Cooperatief UA (Palaeontol COOP), which in turn is a wholly-owned subsidiary of Hong Kong-listed MIE Holdings Corp (MIEH).

"The proposed acquisition is pivotal, as it will be the first hydrocarbon asset to be owned by Reach Energy.

"Since the producing fields within the Emir-Oil Fields are already in production and with established infrastructure of gas pipeline, gas processing plant, oil processing, oil storage and transportation facilities in place, the proposed acquisition is expected to immediately contribute positively to the revenue of Reach Energy," the filing said.

Last Saturday (March 5), the company said it signed the conditional sale and purchase agreement with Palaeontol COOP and MIEH to acquire the 60% stake in Palaeontol BV.

Under the acquisition, Reach Energy will also assume 60% of Palaeontol BV's outstanding shareholder loan. The firm said the outstanding loan stood at US$288.5 million as at Sept 30, 2015.

Reach Energy said it planned to use its initial public offering proceeds to finance the Palaeontol BV stake acquistion. The company said it also intended to issue to new shares to raise money to finance the purchase.
 
Today, Reach Energy's share traded has been suspended between 9am and 2:30pm, in conjunction with the acquisition announcement. Last Friday (March 4), the stock closed at 66 sen, for a market value of RM843.4 million.