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LONDON (Alliance News) - Empyrean Energy PLC shares declined on Wednesday after it said it has failed to secure a satisfactory offer for the company and has decided to terminate its formal sale process so it does not "prolong shareholder uncertainty".
Empyrean shares fell 6.0% on Wednesday morning to 5.64 pence per share.
In July, the company put itself up for sale as part of a review of its strategic options following a number of corporate acquisitions for companies close to its flagship project, the Sugarloaf AMI in the prolific Eagle Ford Shale in Texas.
The AIM-listed US onshore oil and gas development and production company said in July it had decided to consider its strategic options to capitalise on the recent acquisition activity, and put itself up for a "formal sale process".
Although it experienced high levels of interest and received a number of indicative proposals, Empyrean said "the significant uncertainty caused by prevailing market conditions has resulted in no proposals being received to date which the board of Empyrean believes appropriately value either the company or its assets."
Empyrean said that the benchmark price for West Texas Intermediate crude oil has fallen by over 50% since July when it put itself up for sale, causing companies to reduce capital expenditure and defer investment decisions.
Empyrean has now terminated the formal sale process as it believes continuing to try to find a buyer for the company will "prolong shareholder uncertainty with no immediate prospect of a satisfactory outcome," it said.
"The board believes that shareholder value is best maintained and enhanced through its continued participation in the [Sugarloaf] project and through growing the company's asset base and production profile," said Empyrean.
Despite the low oil price hindering its strategy, the company is confident the Sugarloaf project has robust economics in the current climate.
Empyrean said it expects further funding will be needed to finance the ongoing development at the project, and will seek to secure alternative financing to lower its cost of capital.
In January, Empyrean said it drew down a further USD6 million from its loan facility with Macquarie Bank Ltd, and repaid USD2 million to the bank as scheduled using funds raised from current production, it said.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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