Trap Oil Group plc Settlement agreement with principal creditors (1524R)

TIDMTRAP

RNS Number : 1524R

Trap Oil Group plc

25 June 2015

Trap Oil Group Plc

("Trapoil",the "Company" or the "Group")

Settlement agreement with principal creditors

Trapoil (AIM: TRAP), the independent oil and gas exploration, appraisal and production company focused on the UK Continental Shelf ("UKCS") region of the North Sea, announces an update in respect of its discussions with the Group's principal creditors.

As a result of detailed negotiations and discussions that have taken place between Trapoil's management and the Group's principal creditors, being CGG Services (UK) Limited ("CGG") and its partners in the Athena partnership group (the "Athena Consortium"), it has been agreed that in return for an aggregate payment of GBP2m to CGG and the Athena Consortium, all of the Company's contractual liabilities to these parties will be ring fenced and/or expunged.

Following payment of the abovementioned GBP2m settlement amount, Trapoil will no longer have any outstanding debt due to CGG. In addition an agreement has been reached with the Athena Consortium whereby all future liabilities (including decommissioning costs) owed to the Athena Consortium will be met by Trap's partners in the Athena Consortium and repayment will only be sought by way of any realisations stemming from Trapoil's existing licences, being P.1610 Block 13/23a (Magnolia), P.1666 Block 30/11c (Romeo), P.1889 Blocks 12/26b & 27 (Niobe), P.1989 Blocks 14/11, 12 & 16 (Homer) and P.2170 Blocks 20/5b & 21/1d (Cortina). In summary, 60 per cent. of any petroleum sales or net disposal proceeds from these licences will be passed over to the Athena Consortium as well as all future revenue generated from our interest in the Athena Oil Field and when 125 per cent. of the outstanding debt obligation has been met, no further amounts will be due to the Athena Consortium. Should Trapoil not have repaid the outstanding debt obligation by the time the Athena field is fully decommissioned the remaining debt will be written off by the Athena Consortium. With respect to the future decommissioning liabilities associated with the Athena field, Trapoil's share of such liabilities is to be satisfied from the cash already held in trust and put in place to cover such costs. In the event of any potential insolvency, or similar proceedings, being commenced by Trapoil in the future, the rights of the Athena Consortium will revert to those in place prior to this settlement agreement.

Subsequent to the abovementioned GBP2m payment being made, the Company's net unrestricted cash reserves will amount to approximately GBP0.4m. The Company will remain exposed to any residual cost over runs on the drilled Niobe well should there be any, as announced on 8 June 2015, and accordingly the Company's directors, in conjunction with the Company's advisers, remain in discussions with shareholders and potential investors to secure additional funding.

A further announcement will be made in due course as appropriate.

Commenting on the settlement agreement, Marcus Stanton, Non-Executive Chairman of Trapoil, said:

"I am pleased that we have been able to achieve a pragmatic solution with our principal creditors. This settlement agreement enables Trapoil to remain solvent in the short term and assess additional funding options for the Company going forward.

Although the Company's future is still far from certain, we are now at least in a better position to be able to move forwards, potentially realise value from our existing asset base and seek to identify the best means for creating maximum value for our shareholders."

Enquiries:

 
 Trap Oil Group        Scott Richardson Brown, Finance   Tel: 020 3691 2015 
  plc                   Director                          www.trapoil.com 
 Strand Hanson         James Harris                      Tel: 020 7409 3494 
  Limited               Matthew Chandler 
                        James Spinney 
 FirstEnergy Capital   Hugh Sanderson                    Tel: 020 7448 0200 
  LLP                   David van Erp 
 Cardew Group          Shan Shan Willenbrock             Tel: 020 7930 0777 
                        Tom Horsman                       trapoil@cardewgroup.com

**ENDS**

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCSEFFMLFISELM

Jersey Oil And Gas (LSE:JOG)
Historical Stock Chart
From Jun 2024 to Jul 2024