Atlantic Petroleum, a Faroese oil and gas company with assets in the North Sea, might have secured a lifeline after entering into Heads of Terms with a UK-based investment company.
Namely, the company which has been working for months to avoid going into administration, has entered into Heads of Terms with London Oil and Gas Ltd, according to which the London-based firm is prepared to inject funds and assets into Atlantic Petroleum of at least GBP 8 million by 24 of June 2016 through a convertible instrument.
This is subject to board approvals, the negotiation and execution of a legally binding agreement, the compromise or resolution in relation to certain liabilities of Atlantic Petroleum North Sea Limited (‘APNS’) and the agreement of arrangements going forward on the treatment of the debt owed to P/F Atlantic Petroleum’s main creditor Eik Bank.
An exclusivity period of 90 days has been set, during which the two companies will discuss and negotiate the proposed transaction. London Oil & Gas will be forwarding a loan of minimum GBP 47,000 per month for the duration of the exclusivity period starting March 24.
Ben Arabo, CEO of Atlantic Petroleum said: “We look forward to negotiate the details of the proposed transaction with London Oil & Gas, and to working on resolving the creditor issues which are necessary to resolve to make a successful outcome possible. Given the Groups current financial position, we think that a solution, as proposed, with London Oil and Gas is the best way forward for Atlantic Petroleum, and its stakeholders.”
Betting on Orlando
Simon Hume-Kendall, CEO of the London Group and London Oil & Gas Ltd said: “We are very keen to pursue this transaction and invest in P/F Atlantic Petroleum. Atlantic Petroleum’s Orlando & Kells assets are expected to have a high value when the market conditions improve, and given the right terms, we are keen to gain an interest in those assets. If the transaction succeeds, London Oil and Gas looks forward to work with Atlantic Petroleum’s management and board to review the company’s strategy and explore the potential for expansion, including geographical, of Atlantic Petroleum’s activities in line with the areas of business of The London Group.”
To remind, Atlantic Petroleum earlier this month sold its Norwegian subsidiary, and also said it remained in default on the Ettrick, Blackbird and Chestnut fields in the UK North Sea.The Ettrick and Blackbird fields are subject to forfeiture by the operator of these fields, Nexen, while Atlantic Petroleum has lost the rights to petroleum from the Chestnut field whilst in default and has a certain period in which to remedy the default.
As for the Orlando field mentioned by the London Group CEO, it is located in the UK North Sea in Block 3/3b at a water depth of 142 meters. Sanctioned in February 2013, Orlando was meant to be developed as a subsea tie-back to the Ninian Central Platform in the Northern North Sea with first production expected in Q4 2016. However, the operator of the field Iona Energy owning a 75% stake went into administration in January 2016, leaving the future of the Orlando field uncertain.