Afren, an international independent oil exploration and production company, has filed for administration after failing to get support for its refinancing efforts.
According to Afren, the recently completed operational review has led the company to expect materially lower near-term production from its assets as compared to the production level assumed in the restructuring plan announced on June 19, 2015.
The company explained that this change is due to a number of timing and pricing assumptions, as well as to some delays in project implementation during the period when initial funding was being finalised.
Afren emphasized that, whilst the overall capacity of the assets to deliver field life production remains broadly unchanged, the near-term deferral of production revenues has undermined the immediate liquidity position of the business. The company has subsequently engaged in detailed discussions with all its stakeholders, including lending banks, bondholders and partners, to discuss the impact of the revised assumptions on Afren’s near-term cashflow, funding requirements and the resulting amendments in the terms of the restructuring which are required to deliver the revised business plan.
“The board believes that all the possible routes have now been explored during the course of this process, which was subject to a strict timetable, driven by Afren Plc’s short-term liquidity issues. These discussions have failed to deliver support for a revised refinancing and restructuring proposal that would result in Afren Plc being able to pay its debts as they fall due,” the company said in the statement.
As a result, the Board has taken steps to put Afren Plc into administration and appoint Simon Appell, Daniel Imison and Catherine Williamson of AlixPartners as administrators. Afren notes that the relevant documentation will be filed at Court during the course of the day.
The appointment is made with the consent of the company’s secured creditors and is seen by those secured creditors as an important step in preserving value in the company’s subsidiaries. Afren added that no other company in the Afren Group has appointed administrators today or taken any other step to start insolvency proceedings.
According to Afren, the Group is in discussions with its partners and other key stakeholders with a view to continuing its operating businesses.