Anglo African Oil shares plunge as it outlines series of roadblocks

The AIM-traded firm said the budget for the planned work programme to be carried out on the Tilapia field in the Republic of the Congo required recovery of the contributions due from Société Nationale des Pétroles du Congo (SNPC), and timely future contributions by SNPC towards its cost.

It said that, while it was “pressing SNPC hard” for repayment of the outstanding debt, which was currently more than $5.3m, it had not received any repayments since its announcement on 19 September.

The company said it had formally requested the country’s oil minister to coordinate a meeting in January between SNPC and Anglo African to resolve this “highly unsatisfactory situation”, so that the work programme, or a modified plan, could proceed.

“In the light of this significant cash shortfall, allied to the lower-than-anticipated payments under the investor sharing agreement announced on 17 July, the board is taking steps to reduce costs and is reviewing financing options,” the board said in its statement.

“Absent payment from SNPC or other sources the company will not be able to drill well TLP-103C-ST.”

Additionally, Anglo African said it was recently informed that the rig over which it had signed an option to drill TLP-103C-ST, as it announced on 12 November, would now not be available until June 2020 at the earliest.

The firm said it had identified two further potential rig options to enable an earlier mobilisation of the proposed programme.

Its board also referred back to its announcement on 12 July, where it told shareholders about a proposed acquisition of Tunisian assets that it had pursued earlier in the year.

“The company received indications from significant shareholders at the time that they would not support the proposed acquisition, and therefore Anglo African Oil & Gas did not pursue it,” the directors said.

“Anglo African Oil & Gas is aware that the acquisition of the Tunisian licences that were the subject of the proposed acquisition has been completed by Anglo Tunisian Oil & Gas - a company of which [Anglo African chief executive officer] James Berwick is a director and significant shareholder.”

As it had contemplated, the company said it was negotiating with Anglo Tunisian for the recovery of the costs incurred by Anglo African in relation to the proposed acquisition.

It said it would make further announcements in due course.

Finally, the company said mediation between itself and rig contractor Société de Maintenance Pétrolière (SMP), which took place in the autumn, was unsuccessful.

As a result, the company said it was continuing vigorously to pursue legal proceedings in the Paris courts.

“The next procedural hearing has been set for 5 February 2020 for the filing of the company's submissions,” the board said.

“Licence negotiations for the re-attribution of the 25-year Tilapia Licence are continuing,” it added.

“The company has agreed the majority of the principal commercial terms.”

At 1606 GMT, shares in Anglo African Oil & Gas were down 70.43% at 0.68p.