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    Circle Shareholders Get Bleak Warning

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Summary

North Africa explorer Circle Oil warned shareholders on May 20 that they may be left with little or nothing once creditors have been paid.

by: Mark Smedley

Posted in:

Natural Gas & LNG News, Corporate, Mergers & Acquisitions, News By Country, Egypt, Morocco, Tunisia, Africa

Circle Shareholders Get Bleak Warning

AIM-listed Irish explorer Circle Oil warned its shareholders on May 20 that they may be left with little or nothing once creditors have been paid.

The North Africa explorer's debt is $77.5mn, comprising $20mn owed to Kuwait private equity firm KGL Investment and a $57.5mn reserve lending facility with the World Bank’s International Finance Corporation (IFC) that is fully drawn. “Based on the indicative proposals received to date, it is likely that there will be little or no value attributed to Circle Oil plc equity holders,” Circle Oil warned, adding that it continues to consider all options, including a debt restructuring, a sale of one or more assets, a merger, selling-up the entire company, and issuing new shares.

(image: circleoil.net)

Circle said earlier this week it had completed its 2016 infill drilling campaign on the North West Gemsa field onshore Egypt’s Gulf of Suez coast, which it operates with a 40% stake – acquired in 2008 from Premier Oil. At the second of the two production wells, AASE-24, a well test began May 16 that flowed at a gross average rate of 1,714 b/d oil and 3.062mn ft3/d gas. Circle CEO Mitch Flegg said he was “pleased with the results.”

Circle last month said IFC had agreed to delay repayments due to it until April 15.

The company also has exploration assets in Tunisia and in Morocco, the latter including also 6.8-7.1 mn ft3/d gross gas production.

Although US fund Carlyle Group this week invested significantly in a Tunisia-focused explorer Mazarine, the market for most north African upstream assets remains tough because of political instability across much of the region, excluding Morocco.

 

Mark Smedley