African focused offshore exploration and production company, Afren, has been forced into administration after being unable to find backing to cover its huge financial hole.
The firm based the majority of its business around African offshore exploration and production of oil and gas, but had two onshore operational fields in the Kurdistan region of Iraq.
The London AIM listed company has had a rough 12 months, with everything from board resignations and removals, to the write down of exploratory fields.
Problems within the firm started when both its chief executive Osman Shahenshah, and its chief operating officer Shahid Ullah, were suspended and later removed over the receipt of multiple unauthorised payments.
Problems then grew further when one of two fields in the Kurdish region of Iraq proved to have far less reserves that first thought, after further examination of seismic data and well tests.
As will all offshore oil and gas operators, the final nail in the coffin came with the slump in oil prices. This alone gave Afren a huge impairment charge of US$900 million.
Back in January of this year, Afren released a statement claiming that the company needed a US$200 million injection just to stay afloat.
Today the inevitable came, when Afren finally released a statement after months of wrangling, declaring its liquidation
The news brings to close the rapid demise of Afren, as only the same time last year, the offshore oil and gas explorer released financial results showing a US$140 million profit. Shares for the company around that time were trading at over 160p each, however the final trading closed with the price of an Afren share at 1.7p.
Afran has appointed administrators Alix Partners, who released a statement saying, “The board explored a full range of options with a view to identifying a restructuring solution to mitigate the impact of this shortfall but regrettably such a solution could not be found. Our role now as administrators is to work alongside all stakeholders to determine the best possible route forward under these challenging circumstances.”