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The Edge Markets - Reach Energy Tells Investors To Look At Long-Term Prospects
KUALA LUMPUR (April 26): Reach Energy Bhd, an oil and gas special purpose acquisition company (SPAC) that is targeting to submit its qualifying asset (QA) proposal to the Securities Commission Malaysia by early May, has urged investors, especially institutional investors, to look at the long-term prospects of the QA.
"There is a lot to gain from this acquisition. Please look at it from a longer-term basis. This is what the E&P (exploration and production) business is all about," its managing director Shahul Hamid Mohd Ismail told reporters after the SPAC's annual general meeting today.
"You come into this business with a slightly longer-term value of the business," he said.
Shahul's plea came on the heels of news that shareholders of another SPAC, Sona Petroleum Bhd, had opposed its proposed acquisition of Stag Oilfield in Australia at an extraordinary general meeting today. Cliq Energy Bhd is currently undergoing a liquidation process after failing to acquire its QA.
Reach Energy has proposed to acquire a 60% stake in Kazakhstan's Emir-Oil Fields for US$154.9 million. Emir will be Reach Energy's first hydrocarbon asset and also its first QA since its initial public offering.
Asked if he thinks institutional investors such as Credit Suisse, which has been accumulating shares in the SPAC, could be a stumbling block for it to complete its QA, Shahul said, "I don't want to think of any investor being a stumbling block as you called it [for us to complete a QA]."
"We can only do our bit [to convince] that Reach is a good company with a great future, and have found a good asset. Particularly for big investors like them, I hope they will look at it that way," he added.
Listed in August 2014 as the fourth SPAC listed on Bursa Malaysia, Reach Energy has 16 months to go before the three-year deadline for its QA.
At noon market close, shares of Reach Energy were traded unchanged at 68 sen with 603,000 shares done, for a market capitalisation of RM868.92 million.