Oil Production Operator
The Company operated conventional, light oil production operations in North America and offshore exploration and appraisal opportunities in Europe and was headquartered in London.
Due to weakening oil prices and declining oil production, the group continued to incur operating losses in 2019, requiring further shareholder support. The Company’s inability to attract material new shareholder investment during 2018 and 2019 increased its reliance upon it’s majority shareholder, . In February 2020 the Company commenced a drilling programme in North America intended to be funded primarily by a new loan facility. However, during March the impact of COVID-19 on oil global demand and the failure of OPEC+ to agree oil production cuts resulted in a severe reduction in oil prices, culminating in negative oil prices. This materially impacted the Company’s cashflow forecasts and, as a result, the loan facility could no longer be completed as intended and operations were immediately suspended.
The directors of the Company’s North American subsidiary implemented cost saving measures and looked to put in place a voluntary arrangement with its trade creditors, however this was unsuccessful. As a result the subsidiary filed a Notice of Intention to Make a Proposal pursuant to Part III, Division I of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3. The Company subsequently received notice from its largest shareholder that it was unwilling to extend further loan funding. The Board considered there was no realistic prospect of any other source of material funding available to the Company in the time available.
As a result of the above and the uncertainty regarding continued funding, the Board immediately commenced a review of the Company’s strategic alternatives, including assessing the value of and marketing the assets of the group. The Board engaged Cork Gully to implement an expedited sales and marketing process for its North American and European subsidiaries and assets.
Cork Gully partners were appointed Joint Administrators and successfully completed pre-packaged administration sale.