PHNOM PENH -- The company operating Cambodia's only active oil field has collapsed under its debt, dealing a blow to the country's hopes of becoming a significant oil producer.
In an announcement on Friday, Singapore-listed KrisEnergy said it was unable to pay its debts and "will proceed to liquidation."
KrisEnergy in December celebrated pumping the Southeast Asian country's first oil from the Apsara field, an offshore concession also known as Block A.
The company's heavy debt, however, was a looming concern even then. KrisEnergy has been under court protection from creditors since 2019 as it tried to restructure more than $500 million in liabilities.
It then revealed in late March that production at Apsara was lower than forecast. A subsequent independent study showed output from the site was likely to be a "small fraction" of pre-development estimates.
The underperformance meant that the company's restructuring, which relied on cash flow from the Cambodia project, was no longer viable, the Friday announcement said. The state of operations at the field was not immediately clear.
KrisEnergy said its liabilities exceed the value of its assets, it lacked an alternative restructuring option, and was unable to secure a near-term infusion of fresh funds.
"Accordingly, the Company has on 4 June 2021 submitted a winding-up petition to the Grand Court of the Cayman Islands," KrisEnergy wrote. "The hearing date for the Winding Up Petition will be fixed."
KrisEnergy holds interests in eight licenses in Bangladesh, Cambodia, Indonesia and Thailand. It lists three producing assets: the Cambodian field, an oil and gas field in Thailand and an onshore gas field in Bangladesh.
Among those, Cambodia has been a core focus for the company in recent years as the government pursued its decades-long ambition of pumping oil.
Previously a minority partner, KrisEnergy acquired the controlling stake in the Block A concession from Chevron in 2014. The U.S. energy giant held the rights from 2002 but exited after setbacks, including disagreements with authorities on tax and revenue-sharing terms.
After signing a production agreement with the government in 2017, KrisEnergy was expected to pump oil within two years but ran into trouble as oil prices fell, revenue from other projects dropped and debt piled up.
The Block A reserves -- initially estimated at 400 million to 500 million barrels -- were once considered a potential source of billions of dollars in revenue, but reassessments saw the field's value downgraded significantly due to low recoverability and the high cost of extraction.
Still, Cambodian Prime Minister Hun Sen praised the long-awaited production as a "significant step" for the nation's energy sector that, he said, would deliver revenue and diversify the economy.
Cambodia's Ministry of Mines and Energy did not immediately respond to a request for comment.
A ministry spokesman expressed dismay in April after learning of the lower-than-expected results from the Apsara field, and raised the prospect of taking legal action against KrisEnergy.