Empyrean Energy Plc (LON:EME) shares added almost 6% as it updated on the disposal of the Sugarloaf oil project earlier this year, gave a run-down of current tax matters and said a previously EGM request had been withdrawn.
Following the disposal the group has a cash balance of £11.6mln, it said, but the anticipated maximum consideration for the sale is for US$71.5mln
Of that, US$10.725 million, or around £8 million, is currently being withheld for potential tax liabilities in relation to the US operations, including the gain made on the disposal of the asset.
But the firm has told the IRS it reckons its total tax liability to be around US$3.5mln, with around US$2 million attributable to the initial purchase price of $61.5 million, with two possible payments of a further US$0.75 million attributable to each of the two contingency payments of up to US$5 million each, associated with crude pricing, though it notes these are not guaranteed to be received.
So it reckons it's liable in all to the tune of around $7.225 million, or around £5.432 million. It currently expects that the IRS will respond to this before August 31 this year.
While low oil prices in the last 18 months have meant no further activity on either the Eagle Oil Pool Development project or the Riverbend project, recent positive momentum in the oil price has reignited interest at Eagle Oil Pool, the firm said, and the company will budget for its share of a small seismic programme and a single test well, estimated at a total of US$2.5 million net to Empyrean (equivalent to approximately £1.878 million).
Empyrean still plans to find a farm-out partner for the Eagle Oil Pool Development project such that no further major financial risk is taken and, to the extent that any surplus funds are held following a successful farm-out process, to distribute these to shareholders in due course.
As reported earlier this month, James Kight and Richard Appleby, together owning 15.5% of the company, wanted Empyrean’s shareholders to vote on a proposal to remove non-executive chairman Patrick Cross and financial director John Laycock.
Empyrean said it had started discussions with Messrs James Kight and Richard Appleby, on its objectives and this proposed distribution to shareholders. Following these talks, the EGM Request has been withdrawn.
Shares added 5.77% to stand at 6.875p.