Tuesday saw Nu-Oil and Gas (LSE:NUOG) announce plans to use recent commodity price volatility as a way of identifying attractively valued acquisitions as part of its new strategic focus.
In an update, the firm said that it is “evaluating potential reverse takeover targets” across all sectors – rather than limiting itself to the oil and gas space alone. In particular, it said it is focusing on the “environmental industries” sectors – where several potential deals are currently in the works.
“The company is confident in its ability to close a reverse takeover transaction in this particular sector,” said Nu-Oil, adding that it would provide an opportunity to diversify away from the “severely depressed” hydrocarbons arena.
Monday saw US crude prices fall below $30 a barrel on Monday as emergency rate cuts by the Federal Reserve and other global markets failed to tame markets amid the spread of coronavirus. Adding fuel to the fire, China revealed that its factory output has plunged at its sharpest pace in three decades.
In contrast, Nu-Oil said it believes that environmental industries present an attractive long-term growth opportunity as widespread investment is encouraged by national and international government legislation. The company also highlighted the recent UK budget, in which chancellor Rishi Sunak proposed a tax on all domestically-manufactured or imported packaging containing less than 30% recycled content.
The proposal, which has been slated for an April 2022 introduction, is a “clear example of policy reinforcing and supporting [our] revised strategy and future growth plan”, added Nu-Oil.
Nu-oil proposed a major restructure in October last year that saw it sell off the majority of its assets and restructure its debt to strengthen its financial position. Its goal was to “create the foundation for a new strategic direction” under new non-executive chairman Jay Bhattacherjee – former chief executive of Aminex (LSE:AEX) – and several other new hires.
The reconstituted board said it intends to complete an acquisition in the oil & gas space. The company is now required to make an acquisition – or, indeed, acquisitions – within six months of 4 November 2019 under AIM rules.