China focused independent Leyshon Energy canceled its listing on London’s AIM stock exchange Tuesday as low oil prices and disappointing drilling results force it to consider a wind-up.
The China based company will return $15.4 million in cash to stockholders as part of the cancellation.
“The costs and regulatory requirements associated with maintaining admission to AIM are a significant burden on the company’s financial and management resources which in the opinion of the Board outweigh the benefits gained,” Leyshon said.
The cancellation is expected to be effective as of February 10.
The move was prompted by “mixed” results at the Zijinshan gas project where the company has been unable to establish an economic flow of gas or secure a farm out.
Slumping oil prices have also made it “very difficult” for Leyshon to pursue new acquisitions and investments as profit margins at multiple acquisition targets shrink.
Leyshon and its subsidiaries currently have consolidated net assets of $16.3 million, including $24.6 million cash on hand and estimated
liabilities of about $8.6 million.
After the company’s AIM listing is canceled it will become an unlisted private company “with minimal positive net assets on a consolidated group basis,” Leyshon said.
The company expects to discharge or settle the groups liabilities, including environmental liabilities tied to Zijinshan, within six to 12 months.
Shareholders will then be asked to consider either winding-up Leyshon or any alternative proposals once the company’s liabilities are settled.