CHK Oil, a Hong Kong-listed company, disclosed on Thursday evening through a statement released by the Hong Kong Stock Exchange that it had lost most of its oil and gas extraction rights in the United States, years after the termination of the lease by the US government.
The statement, published on the company’s website, revealed that the company no longer holds three out of four lease rights in an oil and gas field in Utah, USA. The statement said, “The group holds extraction rights in an oil and gas field in Utah, USA through four leases entered into with the Bureau of Land Management of the U.S. Department of the Interior. The company recently learned on August 9, 2024, that the Bureau of Land Management had issued written orders on November 14, 2022, stating that three of the leases in question had terminated on July 31, 2020, and March 31, 2021, respectively.”
“The receipt of the aforementioned written orders was reported to the Board of Directors of the company only recently. The company will further investigate the reasons for the delay in reporting.”
According to the report by Nikkei Asia on Friday, CHK Oil stated that they are seeking advice from legal advisors in Utah to assess the impact and potential legal actions to be taken.
Several questions have emerged regarding this case: Why did the Board of Directors not notice the US government’s written orders in the past two years? How did these written orders suddenly surface last week? What legal or administrative consequences might arise from this situation?
Utah’s real estate is the sole oil and gas asset of CHK Oil. Its latest financial performance report for 2023 showed a 55% decrease in annual revenue to HK$161.49 million (US$20.7 million), and the company’s net loss widened by over 40 times to HK$49.55 million (US$6.36 million) compared to the same period last year.
On August 14th, in response to the company’s request, the Hong Kong Stock Exchange Main Board suspended trading of its stock pending the announcement of insider information.