Circle Oil assets sold off
The debt-ridden Irish-founded exploration company’s newly appointed administrators – David Baxendale and Ian Green of PwC – executed the sale yesterday, effectively bringing an end to Circle’s long-running strategic review process and hastening its path to an expected winding-up.
Circle has a total debt mountain of $77.5m. Of that, $57.5m relates to secured debt owed to the World Bank-affiliated International Finance Corporation, with $20m classed as an unsecured convertible loan held by a subsidiary of KGL Investment Company.
SDX Energy — a UK-based, Egypt-focused exploration and production company — has bought Circle Oil Egypt and Circle Oil Maroc. That effectively leaves Circle with an offshore prospect in Tunisia, which seemingly attracted no interest during the review process.
The company, which has its roots in Limerick, yesterday reiterated that shareholders will see no value from the sale of the assets, with anything raised earmarked for debt repayment.
“The strategic review process progressed with a view to maximising value from the assets of the company. Taking all matters into consideration, it became clear that the most viable and valuable outcome was a potential sale of Circle Oil Maroc and Circle Oil Egypt,” the company said.
Circle has been under financial pressure for some time due to a number of reasons including declining lending facilities, falling production, the general low oil price environment and ongoing late payments from the Egyptian General Petroleum Corporation, which is one of the chief buyers of the company’s oil.
Circle Oil’s shares were suspended from trading on London’s AIM market at the end of June and were delisted at the end of last month.
Oil prices were headed for their second weekly increase yesterday, with Brent Crude hovering above $56 per barrel.
Earlier this week, the US Energy Information Administration (EIA) forecast that oil would remain below $60 for 2017, as markets tighten.
“Global production and consumption are both projected to increase through 2018, but consumption is expected to increase at a faster rate than production,” the EIA said.
