Reach Energy to increase oil production, number of wells

PETALING JAYA: Oil producer Reach Energy Bhd is looking to increase its oil production levels to between 4,000 and 5,000 barrels of oil per day (bopd) by the end of the year, and the number of oil wells in its inventory to 88 by 2026.
The company which saw production levels stand at 3,301 bopd in 2016, currently has 54 oil wells in its Kazakhstan asset Emir Oil fields.
Of these 54 wells, 14 wells currently active.
“Each well costs about US$6 million, these (capital expenditure for) 34 wells we intend to drill, is spread over many years,” CEO of Reach Energy Ir Shahul Hamid told reporters after the company’s AGM.
Emir Oil produces from four oil and gas fields namely Aksaz, Dolinnoe, Emir and Kariman, has two development fields known as North Kariman and Yessen.
According to Shahul, the company is planning to start producing in these development fields which already has wells used for test productions and is hoping to get approvals for production licences by the first half of 2018.
Besides that, it will also be investing RM35 million to build two pipelines between 20km and 25km long, which will connect its asset to state lines. This project which is expected to be completed by the end of next year, will be funded internally.
Going forward, the company which has a production costs of USD25 per barrel is looking to keep production cost low and maximise its resources.
About 80% of the targeted sales revenue for this year are expected to be contributed by exports, while 20% are expected from domestic sales within Kazakhstan.
Reach Energy whose reserve levels are at 95million barrels is also targeting to produce an average of 1.28 million stock tank barrels (MMstb) this year with an average of 3,500 barrels of oil per day.
On another note, it said no decision has been taken thus far on a proposed private placement exercise, through which it can raise up to RM180 million to address the potential cash shortfall to purchase shares from dissenting shareholders in relation to its qualifying acquisition (QA).
However, it has not ruled out the possibility of undertaking the exercise, citing that the “option is still on the table”. The company had cash in hand of RM88.99 million as at March 31, 2017.
Its two prime customers are Kazakhstan based crude oil and gas distributors,Euro Asian Oil SA and KazTransGaz (KTG).
Reach Energy was a special purpose acquisition company which graduated from the category after acquiring a QA in November last year. It acquired 60% stake in Palaeontol BV, the owner of the onshore oil and gas field called Emir-Oil LLP in Kazakhstan, for US$154.89 million (RM640.54 million) last year.
The company’s share price closed up one sen to 46 sen yesterday.