Columbus Energy Resources PLC Business update - La Lora Concession in Spain (5837F)

TIDMCERP

RNS Number : 5837F

Columbus Energy Resources PLC

22 February 2018

22 February 2018

COLUMBUS ENERGY RESOURCES PLC

("Columbus" or the "Company")

Business Update - La Lora Concession in Spain

Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, provides the following update affecting its Spanish subsidiary, Compañía Petrolifera de Sedano S.L.U. ("CPS").

As previously announced by the Company on 21 December 2017, the Spanish Government has confirmed they will close the current La Lora concession (the "Concession") in early 2018 after the completion of the relevant documentation and activities on the Concession, including certain dismantling works by CPS. Those dismantling works are now complete and the Company is expecting the Concession to be formally closed shortly.

Following such closure, Columbus intends to participate in the tendering process for a new concession (expected Q2-Q3 2018). The duration of the tendering process, however, is still un-certain and, as such, the Company is not prepared to un-necessarily continue to bear the ongoing costs of the employee suspensions which commenced under Spanish law on 23 February 2017. CPS will therefore commence a Collective Dismissal Procedure ("CDP") under Spanish law on 23 February 2018 that will affect its employees in Burgos, Spain. The Company will retain sufficient employees in Burgos and Madrid to participate in the tendering process and maintain the Ayoluengo field on a "care and maintenance" basis until a new concession is awarded, as required by Spanish regulations.

The CDP will take approximately 30 days to complete. The cost of the CDP, an estimate of which is included in the Company's 2018 Budget, will be fully met from currently available funds within the Company.

The closure of the Concession has been a protracted and frustrating process for the Company with an apparent disregard by the Spanish authorities towards maintaining the employment of staff in the Burgos area. It should have been a relatively short and straight-forward process to close out the Concession to enable the tender for the new concession to take place but, despite these delays, the Company has continued to meet its ongoing obligations on the Concession, including meeting the staffing, legal and operational costs associated with keeping the field in good order. This has involved the Company continuing to provide funds to CPS of approximately US$60,000 per month to meet ongoing costs. The above development will reduce the operational costs of the Company on an annualised basis, in line with the Company's continued focus on capital discipline.

Leo Koot, Executive Chairman of Columbus, commented:

"We have taken a very difficult decision, affecting our remaining employees in Spain. The decision to commence the Collective Dismissal Procedure was taken because the Company has incurred significant costs in Spain due to the Government's decision not to renew the La Lora Concession, exacerbated by the lengthy period between that decision and the (yet to be completed) closure of the Concession. Given the time we expect it will take to complete the tendering process for a new concession, it is unsustainable for the Company to continue to incur the current costs of suspended operations.

"We would like to thank the ongoing support we have received from the community local to the Ayoluengo Field, including the trade unions and local politicians. Despite the latest developments we are committed to re-applying for the new concession and obtaining value from our investment and today's news is not impacting our overall strategy and delivery of our Trinidadian assets which are the main cash generator and opportunity for growth of the business."

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Contact Information

 
 Columbus Energy Resources plc          [phone] 
  Leo Koot / Gordon Stein                9230 
 VSA Capital Limited 
  Financial Adviser and Broker 
  Andrew Monk / Andrew Raca / Justin    [phone] 
  McKeegan                               5000 
 Beaumont Cornish Limited 
  Nominated Adviser 
  Roland Cornish / Rosalind Hill        [phone] 
  Abrahams                               3396 
 Camarco 
  Public and Investor Relations         [phone] 
  Georgia Edmonds / James Crothers       4983 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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February 22, 2018 02:00 ET (07:00 GMT)