Embattled petroleum company Baraka Petroleum Ltd has withdrawn from the Mali and La Punta projects, following its path into voluntary administration last month.
Embattled petroleum company Baraka Petroleum Ltd has withdrawn from the Mali and La Punta projects, following its path into voluntary administration last month.
The company said it was served with a notice of termination from the La Punta joint venture, while its Mali JV partner, ENI, released it from its obligations and liabilities.
Baraka's update follows Intellect Holdings Ltd, provider of EFTPOS machines, which placed itself into administration yesterday.
Intellect appointed Michael Ryan and Ian Francis of Taylor Woodings as its administrators.
Baraka has appointed Chris Williamson and Kim Strickland of SimsPartners as its voluntary administrators.
The full announcement by Baraka is pasted below:
Baraka Petroleum Limited (Administrator Appointed) (ASX: BKP, the "Company" or "Baraka") provides the following shareholder update.
The Board appointed Chris Williamson and Kim Strickland of SimsPartners as Joint and Several Voluntary Administrators of the Company on 30 April 2008. This Board resolved to appoint a Voluntary Administrator only after careful consideration and on the basis that there was a reasonable expectation that the Company would be unable to meet its financial commitments as and when they became due in relation to:
- its ongoing participating share in the Mali seismic programme which commenced in late 2007 (Baraka free carry period expired in March 2008). Baraka's share of participation in the Mali seismic programme was approximately US$700,000-800,000 per month, with total costs estimated at approximately US$8 million up to the end of the planned seismic programme (BKP share); and
- the drilling of the La Punta-2 (LP-2) development well in the La Punta oilfield in Colombia. The costs of the LP-2 well formed part of Baraka's work programme obligations in relation to the Assignment Agreement entered into in October 2007. The cost of drilling and completing LP-2 was expected to be approximately US$6.2 million (BKP 100%). The LP-2 well was to spud in mid-May 2008.
As previously disclosed, prior to entering into Voluntary Administration, the Company had actively explored a number of options regarding the funding of these commitments.
Also, Baraka actively sought to divest or farm-down its oil and gas interests in Mali, Mauritania and Colombia.
Whilst several parties expressed interest and entered into detailed discussions, none were able to be completed in the time frame required to allow Baraka to meet its pending obligations.
In addition, and following advice from the Company's corporate adviser, the Company undertook a world-wide capital raising road show. During this road show, a number of alternative financing structures were considered, however due to difficult equity market conditions and the Company's continuing commitments in West Africa, the capital raising was ultimately unsuccessful in the required timeframe.
As a result, the Board resolved to appoint a Voluntary Administrator to provide the Company with the time to continue negotiations and to resolve its position in respect of its joint venture interests.
Progress in Administration
The Board and reduced management team are now working closely with the Voluntary Administrator to address the issues in relation to the Mali and La Punta joint ventures with a view to successfully completing the period of Voluntary Administration as soon as possible.
Mali
Baraka Mali Operations Limited (BMOL), a wholly-owned subsidiary of the Company, has now submitted a formal notice of withdrawal from the Mali joint venture. This notice of withdrawal became effective from May 31 2008.
The Company is pleased to announce that on June 5, the Mali joint venture operator, ENI formally advised that, subject to the completion of an Assignment Agreement, it will release BMOL from its obligations and liabilities with respect to the Mali joint venture.
Mauritania
The Company is currently attempting to farm-down or dispose of its 25% interest in the Mauritania Blocks Ta11 and Ta12 through an asset sale, with a number of companies actively reviewing the opportunity. Baraka's interests in Mauritania have the benefit of a free carry through the current approved work programme and beyond, which is estimated to be for approximately twelve months.
La Punta
The Company has been served with a formal Termination Notice from the La Punta joint venture.
This notice was received as a result of Baraka's failure to complete the funding of the LP-2 development well. Baraka's share of future oil production and oil reserves has therefore been retained by the La Punta JV.
Chicuaco
Baraka retains a 20% working interest in the Chicuaco block. Baraka is in discussion with a number of parties regarding the partial or complete sale of the Chicuaco asset.
Cash Position and Ongoing Corporate Strategy
As at May 8 2008, the Company's net cash surplus was approximately $700,000.
At the second creditors meeting held on May 30, the Company's creditors agreed to adjourn the meeting for a period not exceeding 45 business days (i.e. to on or before August 1st 2008).
