Connacher walks away from deal with East River Oil and Gas
Bankrupt producer Connacher Oil and Gas says it is abandoning plans to sell its assets to East River Oil and Gas, after the company failed to make a $2 million deposit on February 15, 2019.
East River had agreed to purchase the junior oil sands producer for $113.5 million, subject to regulatory approvals from Alberta and the Chinese government. The company failed to get approvals from Chinese regulators before the January 31 deadline, and had asked for an extension. Connacher and its lenders agreed to extend the deadline to the end of March, provided a $2 million deposit was made in mid-February.
East River is an affiliate of Shanghai-based Changchun Sinoenergy Corp. The company's original $13.5 million deposit was forfeited, now that the deal has been terminated.
Connacher has been operating under creditor protection since the spring of 2016. The company's main producing asset is the Great Divide SAGD oil sands facility, which has a nameplate capacity of 20,000 bbl/day. The plant has been operating at reduced rates since 2016 in order to preserve funding.
CEO Merle Johnson says Connacher "is looking forward to moving to the next chapter ... and emerging from [creditor] protection with the full support of its stakeholders."