The latest revision to the price seeks to expedite the transfer of liabilities to the buyer
() has agreed a further amendment to the terms of its sale of its Congo business, in order to expedite the transfer of cost liabilities to Zenith Energy.
In a statement, the company said it has been agreed that Forum will now pay £200,000 in cash, upon approval by AAOG shareholders – this comes after a March revision down to £800,000 from the £1mln agreed in December.
The latest revision comes amid heightened uncertainty over certain timelines, which would leave AAOG to additional costs and funding issues.
AAOG arranged the divestment back in December, as it sought to reposition its business, and today the company told investors that its cash position at that time did not allow for the completion to be delayed as long as it presently has been.
Moreover, the transaction is being held up by coronavirus (COVID-19) pandemic and process within the Congolese authorities.
In Friday’s statement, AAOG noted: “The delay to completion has been the wait for the Minister of Hydrocarbons in the Republic of Congo to consent to the change of control of AAOGC which has so far not been forthcoming and which is a condition to completion of the disposal.
“Neither AAOG nor Zenith can say with any certainty when such consent will be forthcoming, particularly in light of the COVID-19 pandemic which has restricted the ability to meet with officials and progress matters.
“Accordingly, there is no certainty as to timing of completion of the disposal, no certainty on when AAOG can expect to receive funds from Zenith and no certainty on when Zenith will assume AAOGC’s liabilities and running costs pursuant to the disposal.”
Also, the company noted that its capital position has in the meantime been supported by strategic investor Forum Energy, though it has stated that it is not prepared to fund any further cash calls to AAOG’s Congo subsidiary.
“This coupled with the collapse in the oil price and the COVID-19 pandemic means that the situation at AAOGC is becoming untenable,” the company added.
“The board of AAOG face the very real prospect of AAOGC falling into some form of insolvency procedure which would obviously mean the disposal would not complete and the company would receive none of the consideration from Zenith.”
The AAOG subsidiary in Congo was owed some US$3mln as of December 2019, for crude sales from the Tilapia field.