Petroleum Africa
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Wednesday, February 4, 2015
Sonde Resources Corp. has filed a voluntary assignment in bankruptcy pursuant to the provisions of the Bankruptcy and Insolvency Act(Canada). In conjunction with this filing, FTI Consulting Canada Inc. has been appointed as Trustee in Bankruptcy.Since 2012, Sonde has been pursuing alternatives for the Joint Oil Block, which traverses Tunisian and Libyan acreage.
In March 2014 Sonde announced that it had engaged Taylor-DeJongh, Inc. to initiate a process to explore and evaluate potential strategic alternatives to enhance shareholder value with regard to the Joint Oil Block. The management of the company along with Taylor-DeJongh have actively pursued all prospects and options available to the company to complete a transaction that would satisfy Sonde’s significant financial commitments under the EPSA covering the block but have been unable to secure and consummate such a transaction.
Sonde said that it was advised by potential investors that the complexity of the Zarat development, the high inert gas content, the extensive capital needed to advance the company’s development plans, and the lack of progress obtaining Tunisian government approval of the Unitization and Unit Plan of Development of the Zarat Field (after over three years of negotiations), coupled with the three exploratory well obligations, were the key deterrents to proceeding with such a transaction.
On December 15, 2014 Sonde announced that it had executed an Exclusivity and Sale and Purchase Agreement with an arm’s length party, providing for a 90-day period of exclusivity during which the parties would negotiate in good faith the terms of definitive documentation to complete the sale of the shares of Sonde North Africa B.V. , the company’s wholly owned subsidiary that is the party to the EPSA. Under the terms of the Exclusivity Agreement Sondewas to receive $2 million of the $8 million purchase price in two installments: $1 million upon the satisfaction of certain conditions relating to transfer of certain assets held by Sonde BV to the purchaser and $1 million on January 31. Sonde required the prepayment to fund its expenses in connection with the negotiation of the definitive documentation relating to the acquisition and for working capital. However, due to objections from Joint Oil, to date, the initial payment of $1 million of the prepayment has not been received and the company has exhausted substantially all of its working capital.
In addition, Joint Oil has rejected the request by Sonde to defer the remaining two commitment wells, one of the conditions precedent for the Exclusivity Agreement, and demanded the payment of $15 million pursuant to the corporate guarantee issued by Sonde in support of the second well commitment under the EPSA.
Toufic Nassif, CEO, stated, “We at Sonde are extremely disappointed that this latest rejection by Joint Oil, under the watch of the Tunisian authorities, was apparently done with total disregard to the critical importance of the $1.6 billion Zarat Development to the Tunisian economy and to satisfying the immediate natural gas needs of Tunisia. Furthermore, we believe this rejection was made with the full knowledge of Joint Oil and the Tunisian authorities that it would lead to the insolvency of Sonde, despite the extensive investments made by Sonde over the past five years. These investments include the drilling of the Zarat North-1 well, two alternative pre-front-end engineering design development plans for the Zarat Field, the acquisition, processing and the evaluation of more than 900 sq km of 3D seismic in both Tunisian and Libyan waters, and the well planning and purchase of long lead materials for the Fisal exploratory well. All of these investments clearly demonstrated Sonde’s dedication and commitment to the natural resource sector in Tunisia and the entire Joint Oil Block. Since January 2012, Sonde has actively sought partners that could meet the substantial financial and technical commitments of the Joint Oil Block. On more than one occasion we have presented potential transaction partners (including one with whom we signed a farmout letter of intent in May 2014) only to be frustrated by Joint Oil.”
As a consequence of these circumstances, the Board of Directors of Sonde authorized the bankruptcy filing as Sonde is unable to meet its financial commitments under the EPSA and otherwise, and it has now exhausted substantially all of its working capital.
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