1. INTRODUCTION

The Board of Directors of Reach Energy Berhad (“REB” or “the Company”) wishes to announce that a court case was initiated against Emir Oil LLP (“EO” or “the Defendant”) in connection with the inspection of the Department of Industrial Safety of Mangistau region of the Republic of Kazakhstan (“Plaintiff”). The lawsuit will be heard at the Economic Court and those claims are detailed in this announcement as follow.

(hereinafter referred to as “the Suit”)

2. PARTICULARS OF THE CLAIMS

Pursuant to the Statement of Claim, the Plaintiff stated that the operation of hazardous facilities and hazardous technical equipment will be suspended until rectification of violations by the Defendant.

3. CIRCUMSTANCES LEADING TO THE SUIT

During an audit conducted for the period from 14 October 2021 to 27 October 2021, the Department of Industrial Safety of Mangistau region had discovered the violation  of industrial safety in some of the EO facilities. In accordance with the legislation on civil protection, the operation of hazardous facilities and equipment in the field of industrial safety is prohibited.

4. FINANCIAL AND OPERATIONAL IMPACT ON THE COMPANY

The preliminary court hearing had been fixed on 22 November 2021.

In the event that the Suit is not in favour of the Company, the financial and operational impact to the Company associated with the suspension of the facilities and technical equipment will be limited to the revenue derived from the production volume for a period before the elimination of violations.

The financial and operational impact to the Company is estimated to contribute 5% to 8% reduction of the total annual revenue for the financial year ended 31 December 2021 and 15% to 25% of total revenue for the financial year ended 31 December 2022.

5. STEPS TAKEN AND/OR PROPOSED TO BE TAKEN IN RESPECT OF THE SUIT

Currently, the Company is seeking necessary technical expert and legal advice to resolve the claims and mitigate the risk of suspension.

The Company will make the necessary announcements to Bursa Malaysia Securities Berhad as and when there are further developments in relation thereof and/or upon receipt of any further directions by the Court.

This announcement is dated 17 November 2021. 

Announcement Info