17th Aug 2016 16:21
LONDON (Alliance News) - Empyrean Energy PLC late Wednesday said it aims to return all the surplus funds generated from the sale of the Sugarloaf AMI project "as quickly and efficiently as possible" as it focuses on reducing costs before moving its attention to its other assets.
The company agreed to sell its 3.0% working interest in the Sugarloaf AMI project in Texas, US, back in February for a total of USD61.5 million plus another potential payment of up to USD10.0 million. The company actually sold the interest for USD71.5 million, but had USD10.7 million of the purchase price, or 15%, retained in escrow for US withholding tax.
Using the funds, Empyrean settled outstanding commodity swap agreements at a cost of USD1.6 million, cleared all of its outstanding debt and converted USD17.0 million into GBP12.0 million to "create a natural currency hedge" as it expects more dollar receipts under the sale and purchase agreement for the Sugarloaf sale.
"Empyrean is now debt-free with surplus cash and it remains the company's intention to retain sufficient funds to meet its on-going working capital requirements and the maintenance and development of its remaining assets," said Empyrean. "Plans to return all surplus funds received from the sale to shareholders as quickly and efficiently as possible".
Empyrean retains a 10% working interest in the Riverbend project in Texas and a 58.084% working interest in the Eagle Oil Pool development project in southern California.
Costs have been brought down across the business, including a 37% reduction in the salaries paid to directors, totalling USD577,000 in the year to the end of March from USD922,000 in the previous year. Administrative costs were cut to USD46,000 from USD298,000, compliance fees fell to USD518,000 from USD697,000 and other total costs dropped to GBP46,000 from USD126,000.
However, the company's pretax loss still widened to USD5.0 million from USD3.8 million in the previous year because of higher finance costs of USD3.8 million from USD1.8 million.
Empyrean shares closed up 1.6% to 8.0 pence per share on Wednesday.
By Joshua Warner; [email protected]; @JoshAlliance
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