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LONDON (Alliance News) - Empyrean Energy PLC on Friday said it has decided to wait for both the judgement of the US Internal Revenue Service and for the first tranche of escrowed funds under its purchase and sale agreement to be received until it finalises plans for a distribution to shareholders.
This comes after Empyrean sold its 3.0% working interest in the Sugarloaf AMI business to Carrier Energy Partners II LLC for up to USD71.5 million in February, but had USD10.7 million of the purchase price, or 15%, retained in escrow for US withholding tax.
The company has since submitted a withholding tax certificate, providing a "detailed assessment of the company's actual tax liability" and, if accepted by the US government's Internal Revenue Service, will mean around USD7.3 million is returned to Empyrean. Empyrean said it expects the Internal Revenue Service to respond before August 31.
Meanwhile, an amount of USD6.2 million, or 10% of the initial purchase price, is currently deposited with an escrow agent, under the terms of the sale and purchase agreement and, if all terms are met, Empyrean will receive half of the escrowed funds six months after the closing of the deal, in mid-August, with the remaining due the following February, subject to any adjustments.
To date, USD110,000 in adjustments have made in favour of Carrier, relating to ad valorem taxes, meaning USD3.0 million is due in August to Empyrean and a further amount in February, subject to adjustments.
Empyrean said, while it remains its intention to only retain sufficient funds to meet ongoing capital requirements and the maintenance and development of its remaining assets, with surplus funds to be returned to shareholders, it believes it is prudent to receive both the IRS judgement and first tranche of funds before a shareholder return.
Empyrean added that recent positive momentum in the oil price has reignited interest at its Eagle oil pool development project and the company will budget for its share of a small seismic programme and a single test well, estimated at an aggregate USD2.5 million net to Empyrean, although there has not been any proposal for this programme or drilling yet. The company noted that it intends to seek a farm-out partner for the project and said it was setting aside funds to make sure it was not diluted out of the project.
Empyrean added that it has spoken to its two shareholders who earlier this month requested an extraordinary general meeting of the company to consider resolutions regarding the removal of two directors.
Kight and Appleby, who have a 9.5% stake and 6% stake, respectively, called for the removal of Non-Executive Chairman Patrick Cross and Financial Director John Laycock.
However, on Friday, the company said the request has now been withdrawn.
Shares in Empyrean were up 0.8% at 6.55 pence on Friday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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