Atlantic Petroleum has agreed to sell its Norwegian activities to M Vest Energy - a company partly owned by Atlantic's existing management.
The Norwegian activities include all of Atlantic's assets and licenses, the liabilities of the licenses, the employees and a cash balance of approximately US$2.2 million (NOK 19 million).
Subject to completion, the move will result in an end to Atlantic's petroleum activities and an impairment of about $22.4 million, and APN expects to realize the tax value of the tax loss carry forward in December 2017 – currently estimated to be approximately $3.2 million (NOK 27 million) in cash.
“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 and 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,” Atlantic Petroleum CEO Ben Arabo said.
Atlantic Petroleum North Sea remains in default on the Ettrick, Blackbird and Chestnut fields, in the North Sea.
The Ettrick and Blackbird fields are subject to forfeiture by the operator of these fields, Nexen, 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 while 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.