- In an effort to free itself of debt, energy company Eon NRG (E2E) has been forced to sell its Silvertip oil and gas field in Wyoming for just US$10 (approximately A$13.96)
- The company sold the oil field to a private exploration and production consortium as part of its $6.3 million (approximately A$8.8 million) debt settlement with the U.S.-based ANB Bank
- Alongside the Silvertip sale, Eon NRG is also transferring a number of its key energy assets to the bank, including its producing oil fields in California, its Borie field in Wyoming, and its working interest in the Government Kaehne well
- Once the settlement completes, the company will be free of all further obligations and liabilities under its previous credit agreement with ANB
- As a result, the company has asked the ASX to lift its shares out of voluntary suspension but will firste need to provide evidence that it can continue to meet current listing standards
- Eon NRG shares remain suspended and last traded at 0.1 cents per share
Long-struggling energy company Eon NRG (E2E) has been forced to sell its Silvertip oil and gas field in Wyoming for just US$10 (approximately A$13.96).
The company sold the oil field to a private exploration and production consortium as part of its debt settlement terms with the U.S.-based ANB Bank.
The company first ran into trouble at the end of last year, when drilling at its Government Kaehne well yielded untenable results and shares began plummeting.
To make matters worse, the beginning of 2020 brought both an oil price war and the onset of COVID-19, which together dragged the company’s producing fields out of profitability and compounded its asset-to-debt ratio.
By February of this year, the company owed ANB Bank around US$6.3 million (approximately A$8.8 million), which exceeded its total asset value, forcing it into negotiations with the bank and suspending its shares in the process.
As well as the Silvertip sale, Eon NRG is also handing over its producing oil fields in California, its Borie field in Wyoming, and its working interest in the Government Kaehne well to the bank.
Eon NRG will stay on as operator of the transferred oil assets for a short time and will receive an operational fee from the bank to keep the sites active. The company will also retain its PRB exploration project and its Nevada mineral lode claims.
These actions, while extensive, will allow the company to move forward free of all further obligations and liabilities under the credit agreement with ANB. As a result, the company has asked the ASX to lift its voluntary suspension but will need to provide evidence that it continues to meet current listing standards.
Commenting in a recent letter to shareholders, Matt McCann, Chairman of Eon NRG, said it was unlikely the company could raise enough capital to continue operating in the oil and gas sector at scale.
Despite that realisation, he remained optimistic about the company’s future on the ASX.
“We have received interest from existing and new investors who are interested in seeing EON take a new and sustainable direction. I cannot guarantee the transition will be seamless. I do, however, give you my assurance, on behalf of the entire board, that we are doing everything possible to protect our shareholders by preserving EON as a viable ASX-listed company,” he added.
Eon NRG shares remain suspended and last traded at 0.1 cents per share.