CALGARY, ALBERTA–(Marketwired – Aug. 25, 2016) – Antrim Energy Inc. (“Antrim” or “the Company”) (TSX VENTURE:AEN)(AIM:AEY), an international oil and gas exploration company, today reported its financial results for the three and six month period ended June 30, 2016.
All financial figures are unaudited and in US dollars unless otherwise noted.
- Annual and special meeting of shareholders to be held on August 30, 2016 to consider approval to voluntarily dissolve the Corporation, delist from TSXV and cancel admission on AIM
- Obtained 100% working interest in Frontier Exploration Licence 1/13, offshore Ireland
- Further evaluation of M&A and other strategic alternatives
- Shareholders are reminded to vote prior to August 26, 2016 at 2:00 p.m. (Calgary Time)
On August 4, 2016 the Corporation announced that it would seek shareholder approval at its annual and special meeting of Shareholders to be held on August 30, 2016 authorizing the voluntary dissolution of the Corporation pursuant to Section 212 of the Business Corporations Act (Alberta), and following provision for satisfaction of any and all liabilities and obligations owed to the creditors of the Corporation, the return of any residual capital to shareholders (collectively, the “Dissolution Resolution“).
Since the divestiture of the Corporation’s producing UK oil and gas assets in 2014, the Corporation has been examining various strategic alternatives, including potential business combinations, to maximize Shareholder value. The Corporation has also been actively engaged in reviewing various options that could lead to generating value from the Corporation’s remaining appraised, but undeveloped UK oil and gas assets and exploration licence offshore Ireland.
To identify and evaluate opportunities, the Corporation used its own internal resources as well as engaged international financial advisers. Very early in this process the Corporation noted that the junior oil and gas sector was distressed, only to have that stress exacerbated by a significant decline in oil prices. While many speculated that this would lead to an increase in M&A activity, to date this has not occurred due to continued volatility in what has been an extended downward market.
Between Antrim’s own extensive technical, operational and financial due diligence over this period and the continued divergent views that exist between buyers and sellers, Antrim has been unable to conclude a transaction on terms that the Board of Directors believe would be satisfactory to Shareholders. With ongoing uncertainty as to the Corporation’s ability to conclude a transaction that will maximize Shareholder value, the Board of Directors of the Corporation (the “Board“) has concluded that it is in the best interest of the Shareholders and the Corporation to submit to the Shareholders a proposal for the voluntary liquidation and dissolution of the Corporation in accordance with the provisions of the Business Corporations Act (Alberta) (the “Dissolution“), and to distribute to Shareholders a return of capital in the form of a cash distribution (the “Distribution“) currently estimated at Cdn $0.05 per Common Share (being an aggregate of approximately US $7,150,000, assuming the Distribution occurs in December 2016 and an exchange rate for the Canadian dollar of US $0.77: Cdn $1.00). If the return of capital of Cdn $0.05 per Common Share is achieved, this will represent a premium of approximately 80% over the three month average daily closing price of the Common Shares on the TSX Venture Exchange (“TSXV“) prior to the announcement.
The amount of any payment(s) shall be determined by the Board after paying or making provision for the Corporation’s obligations and reviewing potential tax and other liabilities of the Corporation, including costs related to the Dissolution such as the winding-up of the Corporation’s subsidiaries. The Canada Revenue Agency (“CRA”) and Alberta Tax and Revenue Administration (“Alberta Revenue”) have adopted a policy of not reviewing applications for Tax Clearance Certificates until the company making the application has formally dissolved and filed a terminal tax return. Should the Corporation determine not to make any Distribution prior to seeking Tax Clearance Certificates, the Distribution amount may be placed in a non-interest bearing bank account during the interval between Dissolution and receipt of the Tax Clearance Certificates. The Corporation will evaluate whether it will seek the appointment of a third party liquidator to assist in the process between Dissolution and the ultimate distribution of funds to shareholders.
The precise timetable for securing the winding up and Dissolution of the Corporation and its Subsidiaries cannot be accurately predicted, however, it is anticipated that the formal Dissolution and winding up of the Corporation and its Subsidiaries will occur in late 2016 or early 2017. It is not possible to predict when Tax Clearance Certificates could be obtained from CRA or Alberta Revenue as their receipt is outside of the control of the Corporation.
To the extent that the Corporation’s expenses, liabilities and obligations are higher than current estimates, or if any unforeseen obligations arise, if the Dissolution is delayed, or if the exchange rate of the U.S. Dollar versus the Canadian Dollar changes unexpectedly, the actual amount distributed to Shareholders may be lower, and possibly substantially lower, than the anticipated net asset value per Common Share based on the above figures.
Should an opportunity arise prior to completion of the Distribution that in the Board’s judgement has the potential to provide a superior return to Shareholders, the Board may in their discretion delay or revoke implementation of the Dissolution. Similarly, should an opportunity arise for the Corporation to sell any of the Corporation’s Subsidiaries (or assets of such Subsidiaries) prior to the Dissolution, the Board may, in their sole discretion, proceed to sell such Subsidiary or Subsidiaries (or assets thereof) on terms acceptable to the Board.
Frontier Exploration Licence (“FEL”) 1/13, Antrim 100%
In June 2016 Antrim received formal approval from the Department of Communications, Energy and Natural Resources (“DCENR”) of its application for a 100% working interest in Frontier Exploration Licence (“FEL”) 1/13. The Corporation has identified two highly prospective Jurassic fault blocks and one Cretaceous submarine fan system in the FEL 1/13 Licence, as well as numerous other leads. FEL 1/13 has a 15 year term, with an initial three-year term followed by three four-year terms. The initial three-year term expired in early July 2016 and Antrim previously submitted a request to extend the first exploration term by an additional two years which request requires the approval of the Irish authorities. The Corporation is currently seeking another company to participate in the licence and complete any additional technical work necessary during the period of any extension granted by the Irish authorities. No assurance can be provided that another participant or an extension of the Ireland licence can be concluded in a timely manner on terms acceptable to the Corporation. As a result of this uncertainty, an impairment charge of $1.3 million has been recognized in the second quarter of 2016 reducing the carrying value of the licence at June 30, 2016 to $nil.
Financial Discussion of Operations
|Three Months Ended||Six Months Ended|
|June 30||June 30|
|($000’s except per share amounts)||2016||2015||2016||2015|
|Cash flow used in operations (1)||(613||)||(1,122||)||(1,637||)||(653||)|
|Cash flow used in operations per share (1)||(0.00||)||(0.01||)||(0.01||)||(0.00||)|
|Net income (loss)||(2,006||)||812||(2,919||)||1,273|
|Net income (loss) per share – basic||(0.01||)||0.00||(0.02||)||0.01|
|Common shares outstanding|
|End of period||184,731||184,731||184,731||184,731|
|Weighted average – basic||184,731||184,731||184,731||184,731|
|Weighted average – diluted||184,731||184,731||184,731||184,731|
|(1) Cash flow used in operations and cash flow used in operations per share are Non-IFRS Measures. Refer to “Non-IFRS Measures” in Management’s Discussion and Analysis.|
Cash Flow and Net Loss from Operations
In the first half of 2016 cash flow used in operations was $1.6 million compared to cash flow used in operations of $0.7 million for the corresponding period in 2015. Cash flow used in operations increased due to a $0.6 million foreign exchange loss in the first half of 2016 as a result of a strengthening of in the value of the Canadian dollar relative to the US dollar and the accrual of $0.4 million in employment and operating lease costs that could be triggered or accelerated, respectively, by approval of the Dissolution. Excluding foreign exchange gains and losses, cash flow used in operations in the first half of 2016 was $1.0 million compared to $1.6 million for the corresponding period in 2015.
In the first half of 2016, Antrim had a net loss of $2.9 million compared to net income of $1.3 million for the corresponding period in 2015. Net loss increased due to impairment charges in the second quarter of 2016, foreign exchange losses in 2016 compared to foreign exchange gains in 2015 and a recovery of exploration and evaluation expenditures in 2015.
Financial Resources and Liquidity
Antrim had a working capital surplus at June 30, 2016 of $8.6 million compared to a working capital surplus of $9.6 million as at December 31, 2015. Working capital decreased due to general and administrative expenses incurred in the period and recognition of a provision for outstanding employment and operating lease commitments the payment of which could be triggered or accelerated, respectively, by approval of the Dissolution.
With ongoing uncertainty as to the Corporation’s ability to conclude a transaction that will maximize Shareholder value, the Board of Directors of the Corporation has concluded that it is in the best interest of the Shareholders and the Corporation to submit to the Shareholders a proposal for the voluntary liquidation and dissolution of the Corporation.
In connection with the Dissolution, the Corporation proposes to delist from the TSXV and to cancel the listing of the Common Shares on the AIM Market. If the Distribution and Dissolution receive the requisite approval by the Shareholders, the Corporation will provide instructions to Shareholders describing the procedures to be followed to effect the Distribution.
In order for the Dissolution to proceed, it must be approved by way of a special resolution by at least 66 2/3% of the votes cast by the Shareholders present in person or represented by proxy at the Meeting. In addition, in order to comply with the AIM Rules for Companies, the Dissolution will be conditional upon the passing of the resolution cancelling the listing of the Corporation’s Common Shares from the AIM Market which resolution must be approved by way of a special resolution of at least 75% of the votes cast by the Shareholders present in person or represented by proxy at the Meeting. If the AIM cancellation resolution is approved, it is expected that admission of the common shares to trading on AIM will be cancelled with effect from 7:00am (UK time) on September 9, 2016.
Notwithstanding receipt of Shareholder approval of the resolution for the Dissolution, the Board will retain the discretion not to proceed with the Dissolution if the Board determines it is no longer in the best interests of the Corporation and the Shareholders. For example, if; prior to its formal dissolution under the ABCA, the Corporation receives an offer for a transaction that will, in the view of the Board, provide superior value to Shareholders than the value of the estimated distribution under the winding-up process, taking into account all factors that could affect valuation, including timing and certainty of payment or closing, proposed terms and other factors, the winding-up of the Corporation could be abandoned in favor of such a transaction.
Antrim Energy Inc. is a Canadian, Calgary based junior oil and gas exploration company with assets in the UK North Sea and Ireland. Antrim is listed on the TSX Venture Exchange (AEN) and on the London AIM market (AEY). Antrim’s second quarter 2016 interim report (including management’s discussion and analysis and consolidated financial statements), is available on SEDAR and our website. Visit www.antrimenergy.com for more information.
“Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.”