REG - Beacon Energy PLC - Corporate and Operational Update

Beacon EnergyAnnouncement

27/08/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240827:nRSa6897Ba&default-theme=true

RNS Number : 6897B  Beacon Energy PLC  27 August 2024

27 August 2024

Beacon Energy plc

("Beacon Energy" or the "Company")

Corporate and Operational Update

 

 

Beacon Energy (AIM:BCE), the full-cycle oil and gas company with a portfolio
of onshore German assets through its wholly-owned subsidiary, Rhein Petroleum
GmbH ("Rhein Petroleum"), provides the following corporate and operational
update.

·    It has become clear that the electrical submersible pump ("ESP") is
running at the lower limit of its operating range - approximately 50 bopd -
and as such the SCHB-2 well has not yet been able to achieve a stabilised flow
rate

·    Plans are well advanced to re-install a rod pump (at a cost of
approximately €75,000) in the coming weeks which is expected to allow a
stabilised flow rate to be achieved

·    In order to maximise the cash generation of the Rhein Petroleum
business, cost reduction measures are actively being pursued

·    The Company has entered into a formal three-month process with the
creditors of Rhein Petroleum, with the aim of agreeing a reduction in
liabilities and a deferred payment plan based on future cash flow generation

·    The Company is in the process of putting forward a restructuring plan
to creditors aimed at maximising cash generation from the Rhein Petroleum
business

The Company has undertaken a thorough review of the Rhein Petroleum cost base
in order to maximise cash generation. Cost reduction measures are actively
being pursued and these initiatives are anticipated to reduce Rhein
Petroleum's annual cash operating costs from approximately €2.5
million currently to approximately €1.3 million. Such cost reduction
measures are likely to be fully implemented by year end 2024.

In order to provide more optionality for the Company as it seeks to establish
the optimum route forward, the Company engaged with approximately 90% of the
creditors of Rhein Petroleum with the aim of agreeing a reduction in
liabilities and a deferred payment plan based on future cash flow generation
of Rhein Petroleum. Unfortunately, an agreement with all creditors could not
be reached and as a result the Company took the decision to place Rhein
Petroleum into a formal process with its creditors (akin to US Chapter 11
bankruptcy protection). This three-month process is expected to conclude in
early October. The Company is in the process of putting forward a
restructuring plan aimed at stabilising production, reducing costs and
maximising cash generation from the Rhein Petroleum business.

As previously disclosed, as a result of the current uncertainties outlined
above and the uncertain impact on assets impairment and going concern in the
accounts, the Company was not in a position to finalise and publish its Annual
Report for the year to 31 December 2023 ("Annual Report") by 30 June 2024,
as stipulated by Rule 19 of the AIM Rules for Companies (the "AIM Rules").

Given the ongoing production instability and formal creditor process, it is
taking longer than originally anticipated to finalise the Annual Report.
Whilst the audit is now substantially complete, and the Company continues to
target the publication of the Annual Report as soon as practically possible,
this is now likely to be during September 2024.

As a result, trading in the Company's ordinary shares on AIM will continue to
be suspended. It is expected that suspension from trading will be lifted with
the publication of the Annual Report.

Stewart MacDonald, CEO of the Company, said:

"The SCHB-2 well continues to perform intermittently. It has become clear that
the ESP was operating at the lower end of its capacity range and as such a rod
pump is viewed as the best way to stabilise production - this should be
achievable in the coming weeks.

 

The Rhein Petroleum creditor process, which is akin to US Chapter 11,
continues and we are confident (but cannot guarantee) a satisfactory outcome
will be reached - likely in early October.

 

The operating and creditor uncertainties experienced complicate the completion
of the Rhein Petroleum audit, its first year as part of a listed group.
Nonetheless good progress has been made and we are confident of publication
during September 2024.

 

Our focus is on stabilising production, implementing cost reduction measures
and maximising cash generation for the benefit of all stakeholders."

 

 

 

Enquiries:

 Beacon Energy plc                                          +44 (0)20 7466 5000

 Stewart MacDonald (CEO)
 Strand Hanson Limited (Financial and Nominated Adviser)    +44 (0)20 7409 3494

 Rory Murphy / James Bellman
                                                            +44 (0)20 7466 5000

 Buchanan (Public Relations)

 Ben Romney / Barry Archer / George Pope
                                                                 +44 (0)20 7186 9030

 Tennyson Securities Limited (Broker)

 Peter Krens / Ed Haig-Thomas

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDPFMPTMTTTBJI