28th Nov 2024 13:02
(Alliance News) - Beacon Energy PLC on Thursday said it expects subsidiary Rhein Petroleum GmbH to liquidate in the new year, following a decline in production levels.
The oil and gas company with a portfolio of onshore German assets said reservoir performance at Rhein Petroleum's SCHB-2 well "continues to disappoint", with current production of around 45 barrels of oil per day. This is a decline of around 20% since its installation of a rod pump in early September.
Shares in Beacon Energy were down 34% at 0.0034 pence each in London on Thursday afternoon.
Beacon Energy had previously put forward a cost-saving restructuring plan to Rhein Petroleum creditors, but current production levels have meant no agreement was reached.
Rhein Petroleum creditors therefore intend to sell some of its assets to a third party by early January, following which Rhein Petroleum will be liquidated.
This proposed liquidation would also see Beacon Energy become an AIM rule 15 cash shell in early January.
As it stands, Beacon Energy believes itself to have enough liquidity to progress new business development through to the end of the second quarter of 2025, and is "confident" it will enter into at least one agreement before then.
Chief Executive Officer Stewart MacDonald said: "The performance of the SCHB-2 well continues to disappoint, to the extent that it calls into question the ongoing financial viability of Rhein Petroleum. We are disappointed that agreement could not be reached with the creditors of Rhein Petroleum and that their preferred course of action is a sale of certain assets and the ultimate liquidation. Whilst Erfelden remains a potentially material oil discovery, very significant capital will be required in order to deliver its potential.
"The ringfencing of Rhein Petroleum's liabilities ensures Beacon has no further financial exposure to the subsidiary and can utilise remaining cash to progress the compelling value accretive opportunities currently being assessed by our experienced board.
"Beacon Energy has an exciting set of opportunities in the business development pipeline. Reducing the cost base leaves the company with sufficient cash, and importantly allows more time, to assess and progress this pipeline. We will provide further updates to the market as appropriate."
By Emily Parsons, Alliance News reporter
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