Muscat: Frontier Resources International has decided to sell its entire stake in Frontier Oman to former chief executive officer Jack Keyes, which is subject to shareholders’ approval.
The company will sell the owner of the oil exploration assets in Oman – Frontier Oman – and the technical support subsidiary FRII, according to a company statement.
Frontier said it was disposing of the Oman business after failing to find a partner for the project, meaning it could not gather the funding needed to develop the project before the deadline set by authorities in Oman.
Block 38, located in the Dhofar Region of southwest Oman, was awarded to Frontier in October 2012.
The potential farm-out process of the Oman EPSA has been ongoing for some time, the company retained the services of a Dallas-based adviser to assist and provide general transaction advice and Frontier Oman has had discussions with a number of parties. “However, the board was unable to complete any transaction or raise sufficient funding and/or provide a bank guarantee for the Oman EPSA before the Funding Deadline. Frontier Oman notified the Oman Government that it had not satisfied the Funding Deadline,” added the statement. No default notification has yet been received (which unless rectified would otherwise lead to the termination of the Oman EPSA) notwithstanding that Frontier Oman is in default of the renewal conditions. Frontier Oman’s sole licence interest is the Oman EPSA.
“There are significant ongoing administrative costs and obligations that Frontier Oman would still incur, should it continue in operation while seeking possible agreement from the Oman Government to an extension of the Funding Deadline and negotiate and agree definitive terms with the potential farm-out partner, with no assurance that Oman Government approval would ever be forthcoming or that any transaction could be subsequently completed on acceptable terms,” noted the statement.
As part of the Oman disposal, certain group liabilities have been novated to Frontier Oman such that on completion of the sale of Frontier Oman, the company will no longer have any liability in respect of any accrued or ongoing costs associated with Frontier Oman, including any professional or other advisory fees potentially payable on a farm-out.