Friday 29 Mar 2024
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KUALA LUMPUR (April 3): Reach Energy Bhd has been categorised as a Practice Note 17 (PN17) company after its shareholders’ equity fell below 50% of its share capital as at fiscal year ended Dec 31, 2022 (FY2022).

The oil and gas (O&G) exploration and production (E&P) company said it triggered the PN17 criteria after announcing its 4QFY2022 results slightly over a month ago on Feb 28.

Reach Energy will have to submit a regularisation plan for Bursa Malaysia’s approval within 12 months from Monday (April 3), according to its filing.

If it fails to comply with obligations as a PN17 company within the timeframe, it risks having its shares suspended from trading, and subsequently delisted.

At end-2022, Reach Energy’s equity attributable to owners of the company stood at RM111.29 million against equity capital of RM488.96 million, as other reserves dwindled and accumulated losses rose to RM394.94 million.

“As at the date of this announcement, the company is taking the necessary steps to address its PN17 status,” the group said in its filing on Monday.

“The company is in the midst of formulating a plan to regularise its financial condition and the announcement on the same will be made in due course in accordance with the listing requirements,” the group said.

Just last week, Reach Energy announced the emergence of Hong Kong-based Super Racer Ltd (SRL) as its new major shareholder with a 48.5% stake, after the E&P company issued some 1.03 billion shares at 20 sen apiece to settle RM206.51 million worth of debt it owed to SRL.  

Reach Energy has been loss-making since FY2014. For FY2022, its net loss widened year-on-year to RM227.65 million or 0.21 sen per share from RM53.41 million or 0.05 sen per share losses for FY2021, driven by higher taxes, finance cost, and impairments.

Revenue, meanwhile, rose 12.46% to RM169.46 million, from RM150.69 million a year earlier.

Shares of Reach Energy closed at 6.5 sen on Feb 28 when it released its 4QFY2022 results, before dropping to five sen on the next trading day on March 1, and further to 4.5 sen on March 13.

The counter has rebounded slightly, closing up half sen or 7.14% higher on Monday to settle at 7.5 sen for a market capitalisation of RM159.67 million.

Reach Energy was established as a special purpose acquisition company (SPAC) in 2013, and conducted a RM750 million initial public offering on the Main Market.

In 2016, the company spent US$175.9 million to buy a 60% stake into Palaeontol BV, the sole interest holder of Emir-Oil LLP, which in turn holds the entire working interest in an approximately 850.3 square kilometres onshore contracted area in the southwestern region of Kazakhstan.

Subsequent to the purchase, Reach Energy became the operator of the Emir-Oil Concession Block and was awarded exploration and production contracts up to year 2036.

Edited ByAdam Aziz
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