Atlantic Petroleum’s fully owned subsidiary Atlantic Petroleum Norge (APN) has entered into a sale and purchase agreement with M Vest Energy for the sale of its Norwegian activities for the consideration of NOK 1.
The Norwegian activities include all of Atlantic Petroleum Norge’s assets and licenses, the liabilities of the licences, the employees and a cash balance of approx. NOK 19MM to be adjusted for costs and expenses from the date of the transaction, January 1, 2016, to closing, Atlantic Petroleum said on Wednesday.
According to the parent company, subject to completion, the transaction will constitute a cessation of all of Atlantic Petroleum Norge’s petroleum activities. As a result of the transaction, the company expects to record an impairment of DKK approx. 150 MM, and Atlantic Petroleum Norge expects to realize the tax value of the tax loss carry forward in December 2017, currently estimated to be approx. NOK 27MM in cash.
M Vest Energy is a company partially owned by the existing management of Atlantic Petroleum Norge.
CEO Ben Arabo comments: “Following a formal sales process last year failing to solicit bids for the Company or parts thereof, Atlantic Petroleum has over the past months been reviewing a range of strategic alternatives and the sale of its Norwegian activities is a step in the process of trying to resolve the issues facing the group in the current oil & gas industry market conditions. We believe the transaction is in the best interest of all stakeholders of the Company and we are pleased that the activities in APN will be continued through M Vest Energy.”
The company stated that the proposed transaction is conditional upon certain conditions including the approval from the Ministry of Petroleum and Energy and the Ministry of Finance.
Restructuring or administration?
Atlantic Petroleum also said on Wednesday that Atlantic Petroleum North Sea remains in default on the Ettrick, Blackbird and Chestnut fields. The Ettrick and Blackbird fields are subject to forfeiture by the operator of these fields, Nexen, (acting on behalf of itself and its co-venturers), which if such forfeiture proceeds, is subject to certain regulatory and contractual conditions.
Also, the company has lost the rights to petroleum from the Chestnut field whilst in default and has a certain period in which to remedy the default. Atlantic Petroleum North Sea is involved in discussions with Nexen on the question of forfeiture, and continues to review its options during the time period available to remedy the default on Chestnut.
Atlantic Petroleum is still in dialogue with a London based group on potential solutions for the company. The company is also continuing discussions with its key creditors and stakeholders including the UK Oil & Gas Authority. These discussions are continuing.
“There is no certainty that a solution or a satisfactory outcome will be forthcoming for the company and failing that, it is likely that the company or subsidiaries will go into restructuring or administration. The company is continuing its planning for all outcomes,” Atlantic Petroleum concluded.