Sin Chew Daily - Reach Energy Radical Seeking Business Opportunities Volatility Of oil Prices To Benefit Oil And Gas Spac

Article Translation: 

 
With the current plunged of oil prices, Reach Energy takes it as an opportunity to make their Qualifying Acquisition (QA) and has radically seeking business opportunities. 

Reach Energy Chairman, Izlan Bin Izhab says: “On the subject of our QA activities, we view that the recent volatility in the oil market will favour acquisition activities as some of the existing holders of oil & gas assets could divest their holdings for reasons including repartition of funds for other uses, portfolio rationalization, debt restructuring, etc.”

Being the largest SPAC in Malaysia to date, in term of fund size, Reach Energy is well-positioned to deliver expected shareholder value. 

Reach Energy will focus on relatively low risk development or production assets with the primary objective to produce oil and gas and generate early revenue. Reach Energy aims to develop balanced portfolio of E&P assets encompassing both production and exploration phrases in order to increase the Company’s hydrocarbon reserves base and market valuation.   

To comment on the outlook of oil and gas industry, Izlan says: “The global population will keep increasing over the next decade and energy consumption is expected to increase exponentially. This macro-economic dynamics is certainly favourable to Reach Energy.”

The oil market observed observed significant volatility since June 2014, where the price of Dated Brent fell to below the USD 100 per barrel threshold. In November 2014, Europe Brent Spot Price FOB recorded an average of USD 79.4 per barrel due to the rising supply in the market, especially from North America’s shale oil production, coupled with the slower demand from major consuming nations such as the USA, Europe, Japan and China. 

Whilst the recent swift decline in oil prices is a concern to many people, nonetheless, the underlying demand from the energy sector is believed to remain strong where oil and gas will continue to be the dominating energy source of the world for many years to come. 

Reach Energy registered a loss of RM28.4 million for the Financial Year Ended 31 July 2014, largely attributable to expenses incurred for listing purpose. As there is no operational income generated during the reporting financial period, it is predictable that operating losses will be incurred until a Qualifying Acquisition is obtained.

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