Oil & gas developer San Leon Energy PLC said on Tuesday it is planning to sell its interest in its remaining Baltic Basin shale gas concessions, onshore Poland.
San Leon said it has informed Poland’s Ministry of Environment it plans to relinquish its interests in the Gdansk West and Szczawno concessions.
This represents, it said, a “significant” reduction in its involvement in Polish operations. Back in September, San Leon sold six Polish assets: the 100% owned Cieszyn and Bielsko-Biala concessions; 100% interests in the Prusice and Kotlarka concessions; and two concessions at Gora and Nowa Sol.
San Leon said the impairment charge on its balance sheet will be approximately EUR7.3 million. Annual cost savings from the sales will be around EUR250,000, plus any work commitments.
Chief Executive Oisin Fanning said: “The company continues to focus on its core Nigerian asset, and this reduction in the exposure in Poland is a natural step towards achieving this.”
In November, San Leon faced a winding-up petition in the Dublin High Court over the non-payment of outstanding liabilities to Avobone NV.
However, later in November, San Leon said the petition was dropped after a revised repayment schedule was agreed. San Leon will pay EUR3.3 million by December 19 and a further EUR8.3 million by January 15. It has already paid EUR4.2 million due on November 27.
The dispute with Avobone goes back to a 2013 request by Avobone to the International Court of Arbitration of the International Chamber of Commerce, for arbitration over San Leon subsidiary Aurelian Oil & Gas’ acquisition of Avobone’s stake in Energia Zachod.
San Leon said at the time it believed the request was without merit and contested the claims, but the court ruled in May 2015 Aurelian would have to pay GBP13 million, including costs, to settle the case. Two-thirds of this related to the repayment of a loan provided to Aurelian by Avobone.
Aurelian said the loan was a standard industry-practice mechanism used to fund Avobone’s share of drilling and other field-related costs in a tax-efficient manner. San Leon said it should only have been repayable had Avobone exited after the field had generated sufficient cashflow to repay the loan. As of the timing of Avobone’s exit in early 2013, the field had yet to generate cashflow, it added.
San Leon shares remain suspended from trading in London, having been suspended in November amid discussions with Midwestern Oil & Gas Ltd for a potential reverse takeover deal.