Empire's Red Gully assets in receiver hands after $15m default

Empire Oil and Gas has defaulted on a $15 million loan facility resulting in the appointment of receivers to assets owned by a subsidiary of the beleaguered oil and gas play.

Empire (ASX:EGHO) is an onshore conventional gas and condensate producer and explorer with key assets including Red Gully, located in the Perth Basin in Western Australia.

Mineral Resources, which was refinancing Empire’s $15 million debt, had notified subsidiary Empire Oil Company (WA) of a default.

Empire agreed on the loan with Mineral Resources in August last year and gave Mineral Resources first ranking as creditor over assets including a Red Gully exploration permit, two production licences, the rights to present and future petroleum extraction and buildings, plant and machinery on the titles.

The wholly-owned subsidiary received a notice of default and demand and deed of appointment of receivers and managers earlier this week.

Insolvency specialists from Deloitte, Matthew Donnelly and Jason Tracy, have been appointed receivers and managers of the secured assets at Red Gully.

“Empire Oil subsidiary is considering its position in relation to the deed of appointment of the receivers and managers of the secured assets,” the company said.

“The Company continues to assess the options available to it and will continue to comply with its continuous disclosure obligations.”

Empire’s shares have been in voluntary suspension since August 30. Empire requested the suspension as it assesses the options to restart Red Gully-1 well production and its impact on the company.

Yesterday, the company requested an extension of voluntary suspension until the release of an announcement by September 27 as the company had not made a final decision to proceed at Red Gully-1 well.