Shareholders look set to lose their entire investment in Hague and London Oil (HALO) as the southern North Sea-focused explorer and producer is liquidated.
The company announced the appointment of directors on Christmas Eve, following a series of asset sales and longstanding questions from shareholders about the company’s relisting.
According to a report prepared by the directors of the company, HALO owes £1.3 million to creditors and has £17.9 million in issued and called capital. Total assets were listed at £601,679.
Although creditors may be able to recoup a dividend, the directors note that “it is considered unlikely” that there will be any return to company shareholders in the process.
Energy Voice spoke to a shareholder who said he stood to lose around £100,000 as the business collapsed.
They said: ‘I, like I imagine every other private investor and shareholder in the company, am completely appalled and disgusted by what has happened.
HALO was listed on the London Stock Exchange Alternative Investment Market (AIM) until 2017, when trading in its shares was suspended as part of its reverse takeover of a Dutch subsidiary of Tullow Oil.
His admission was revoked later that year due to the society’s inability to appoint a replacement designated adviser.
While HALO management, including interim chairman and CEO Andrew Cochran, maintained the company’s reinstatement plan at the time, the company was never relisted and shareholders say no further cash or secondary trading facility has been provided.
Breakdown of liabilities
The company’s recent woes appear to have been the result of increased dismantling responsibilities at its Dutch assets.
In 2020, HALO paid 1.87 million euros to Aspen Insurance as cash guarantee for its debts, and had to pay a larger sum in 2021. Following the pandemic, and without the money to pay this guarantee, the company sold this set of assets to RockRose Energy for 1 million euros, as part of an agreement that would commit the latter to assume responsibility for them.
Following the sale, this 1.87 million euros was to be repaid to HALO, although the administrators claim that payment has not been received to date.
Filings suggest that HALO had planned to use the cash to pay remaining consideration of €1.5 million owed in connection with its takeover of Third Energy Offshore in 2018. Now managed by a unit of Barclays, Northwharf, this payment was due by December 2021.
However, without the sum of insurance repaid, the company went into default, leading to the appointment of directors that month.
The documents also show that HALO’s subsidiaries – HALO SC54A BV and HALO Offshore UK Ltd – each hold exploration licenses.
SC54A had apparently defaulted on payments due on its 15% share of the license of the same name in the northwest Palawan Basin, off the Philippines. The license is now held by a third party.
HALO Offshore UK holds a 100% operated interest in License PL2578 in the UK’s Southern North Sea, which contains the Schooner field.
These two entities remain outside the insolvency process and under the control of the company’s managers.
“A bitter taste”
Documents seen by Energy Voice show shareholders complained about increasingly opaque decision-making at HALO throughout 2020 and 2021, and their approval was not sought for key transaction decisions taken since the delisting of the company.
“The nature of the events, the duration and the opacity of the management of HALO, in particular under the direction of Andrew Cochran, and against the backdrop of the explosion of energy prices in 2021, have left a very bitter taste”, one said.
“Shareholders were never given the opportunity to properly discuss HALO, they were told not to attend last year’s 2020 AGM and they were not given the opportunity to attend virtually/in line.”
Mr. Cochran, who owns a 22% stake in the company, could not be reached for comment.
HALO was created in 2014 through a reverse acquisition by Wessex Exploration.
Following its takeover of Tullow, it purchased Third Energy Offshore via an all-stock transaction in 2018, which would have diluted previous shareholders’ interests by approximately 19.25%.
The acquisition included interests in exploration prospects such as Pegasus and Andromeda.
It then relinquished its unoperated stakes in Pegasus in 2020, although remaining partners Neptune Energy and Spirit Energy subsequently agreed to equalize their stake in Pegasus and move the project forward.
In May 2021, it sold all of its Dutch assets to Rockrose Energy – a subsidiary of London-headquartered Viaro – offloading the portfolio due to “significantly increased abandonment liabilities” and “underperformance relative”.
The package included interests in the Joint Development Area (JDA), the fields adjacent to the JDA, the North Area, the Western Gas Transport (WGT) pipeline and processing plant at Den Helder and the WGT expansion.
The area covered approximately 2,800 km2 and the assets generated an average net production of 2,198 boepd in 2019.
After the sale in 2021, the company said it was “assessing opportunities in Europe for renewable energy,” including onshore geothermal and offshore carbon capture and storage.
To do so, he said he would maintain his interests in the Philippines as he explores the potential for geothermal power generation.
He also said the Schooner field under license PL2578 could be redeveloped or used as a CCS site.
HALO said it also planned to change its name to “better reflect” its shift towards these new activities.
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