Attis updates market on Fort Worth Field and asset sales

Attis Oil and Gas updated the market on the Fort Worth Field in Texas on Wednesday, of which it is a 50% joint venture owner with APEG Palo Pinto.

The AIM-traded firm said Attis Operating is the non-owning operator of the field, adding that it currently produces around 320 million cubic feet of gas and five barrels of oil per day, being 60 barrels of oil equivalent.

It said the Fort Worth Field has 98 wells across 5,100 acres, and is operated by Attis.

The company’s board said it had now notified APEG that it would formally exercise its rights under the joint operating agreement, given APEG's apparent failure to meet its financial obligations as a joint venture partner.

“APEG has not paid its share of costs associated with the field, including 50% of the bond posted with the Texas Railroad Commission and approved work programme and budget,” the Attis board said.

“The company has made numerous attempts to settle the outstanding issues, including agreement for APEG to pay historic taxes associated with the field.

“Due to continued failure by APEG to pay its share of the costs, the company issued a notice of default to APEG under the joint operating agreement in an attempt to recover a total of approximately $0.25m of past due costs.”

Attis said the effect of the issue of the default notice was that it was entitled to 100% of the revenues from the field, although a continuation of historically low natural gas prices in the US - currently at a 20 year low - had resulted in the field operating at a loss in recent months.

“Given [these] factors … and as notified by the company in its announcement of 2 January, the company is considering its options regarding a disposal of its interest in the field,” the directors said.

“The board remains conscious that, if it were to take a decision to abandon any of the wells on the field, as the operator it would remain liable for the plugging and abandonment liabilities which are currently estimated at approximately $25,000 per well.”

Additionally, Attis said on 11 February that it had sold its interest in the Bivins 115 lease, in the Red Cave formation in the Texas Panhandle, for a consideration of $50,000 paid in cash.

The firm had acquired the lease in October for a consideration of $23,000.

“The company has received an offer for the purchase of Northcote Cleveland - its wholly-owned subsidiary - that holds the leases comprising the Zink Ranch Field for $225,000,” the board said.

“The Bureau of Indian Affairs is in the final stages of approval of the assignments of the leases to Northcote Cleveland.

“The company plans to close on the sale as soon as practical following final assignments.”

Attiss said it was evaluating offers for the sale of the Austin Field, but had not approved any of them at the current time.

It explained that any sale of the Austin Field was conditional on the approval by the holders of a loan note dated 21 October 2019 for £420,000, with a maturity date of 21 March 21.

“The Austin Field is used as collateral for the loan and subject to a security interest filed with the Texas Secretary of State.

“Furthermore, the company expects that the sale of the Austin Field would also be subject to shareholder approval pursuant to AIM Rule 15.”