Cobalt Seeks Buyer for Entire Company

The US Gulf producer Cobalt Energy, which initiated arbitration earlier this year against Angola’s Sonangol for $2bn damages after the latter cancelled a $1.75bn acquisition of Cobalt's Angolan interests -- says it now favours a sale of the entire company. The company reported a net loss of $150mn in 3Q 2017, compared with a net loss of $218mn in 3Q2016.

CEO Timothy Cutt told analysts in a 3Q conference call November 2: “If nothing changes, Cobalt could breach its liquidity covenants in 1Q 2018." As at September 30, 2017, cash, cash equivalents, short term investments and restricted cash were some $547mn.

Cobalt said that marketing efforts continue with respect to its US Gulf of Mexico assets: “However, given the scope of these assets, this process has taken longer than expected. Interested parties continue to be engaged in Cobalt’s data room and the process is still moving forward.” 

Regarding a sale of the whole company, Cutt said that “potential buyers have evaluated our Angola assets.”  It’s generally accepted that Cobalt would have to reach a negotiated settlement to be able to transfer its 40% interests in oil and gas rich blocks 20 and 21 offshore Angola to a third party. The CEO acknowledged that Angola now has a new president and new secretary of state for petroleum, but that constructive negotiations could take time.

“We’re focused on the sales process, that continues. We continue to reach out and have discussion in Angola. And we move forward with keeping open-minded to all potential outcomes,” said Cutt. But if a buyer cannot be found, then it has engaged "senior advisers to assist us in analysing all of our alternatives, including a restructuring or reorganisation under Chapter 11 of the bankruptcy code."

Mark Smedley