Beacon Energy plc expects its German subsidiary Rhein Petroleum GmbH, with debts of €7.5 million, will be sold following a 20% drop in production.
CAPITAL
The company said it was looking to other areas in Europe as well as Africa and the Far East for new opportunities which it has been assessing for the past year.
Reservoir performance from the SCHB-2 well at the Erfelden field in Hessen continue to “disappoint” with current production falling to 45 bopd since installation of a rod pump in September.
Despite cost cutting measures previously introduced low production cast doubt on the financial viability of Rhein Petroleum.
Beacon added it had been unable to agree a financing restructuring plan with Rhein Petroleum’s creditors who now plan to sell certain assets of the subsidiary to a third party.
Completion of the sale is expected in early January 2025, after which Rhein Petroleum is expected to be liquidated and become an AIM Rule 15 cash shell.
Beacon has “sufficient” liquidity to the end of Q2 2025 for new business ventures and is “confident” of agreeing at least one opportunity before the middle of next year.
Chief executive Stewart MacDonald said that Erfelden remained a “potentially material oil discovery” but needed “very significant capital”.
“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 and a motivated and high-quality board focused on growing the company and creating long term sustainable value for shareholders.
“Reducing the cost base leaves the company with sufficient cash, and importantly allows more time, to assess and progress this pipeline.”