Cobalt International Energy Inc. (NYSE: CIE) continues getting knocked against the ropes by federal investigations, a $1.6 billion impairment, possible delisting from the New York Stock Exchange and its troublesome divestment of its Angola assets.

Cobalt is already marketing its Shenandoah asset in the U.S. Gulf of Mexico (GoM) to find more funds. But the company could go much further, CEO Timothy J. Cutt said.

Cutt said the company has three strategies open to it: sell assets to fund its core projects; merge with another company with cash flow to fund developments; or sell the entire company.

“Cobalt has enough cash available to continue to progress its development plans into 2018, so for development of Cobalt’s highest value assets we are currently marketing our position in Shenandoah and Angola to lower capital spend and help fund the developments at North Platte and Anchor,” Cutt said.

Cobalt began the year with $957 million in cash, equivalents, investments and other capital, benefitting from $500 million of liquidity raised in fourth-quarter 2016, said Evan Calio, an analyst at Morgan Stanley.

Cutt said the Angola sale has continued to stall because the country’s Sonangol Group will not grant extensions for development.

Cobalt said it requested that Sonangol extend certain deadlines for exploration and development milestones under the company’s license agreements governing Blocks 20 and 21 and these discussions are still ongoing. As a result, the process for the sale of Cobalt’s Angolan assets will continue into 2017.

“I traveled to Angola during the quarter to clarify where we stand on receiving extensions,” Cutt said.

During a meeting with Isabel dos Santos, Sonangol’s chairwoman, “it was made clear that Sonangol’s preference is for Cobalt to present potential buyers to Sonangol to finalize terms of the expansions.”

Dos Santos is the daughter of Angola’s authoritarian president Jose Eduardo dos Santos.

Cutt said the company submitted a formal notice of dispute with Sonangol on March 8. “We are prepared for arbitration and will protect the entire investment of $2.2 billion [by Cobalt] if an amicable solution is not reached in the near term,” he said.

Arbitration may push Sonangol into action, Tudor, Pickering, Holt and Co. said.

For now, Sonangol’s request to make Cobalt submit buyers to the group has slowed the marketing process.

In addition to the matter of extensions, the Angola assets have been befuddled by accusations of impropriety.

In 2015, a deal was reached with Sonangol to purchase the Angola assets for about $1.75 billion. The deal was scuttled after the U.S. Department of Justice began investigating connections between senior Angolan government officials and an Angolan company that, until 2014, held a working interest alongside Cobalt on Blocks 9 and 21 offshore Angola.

The investigation was closed in February and no regulatory action was taken against Cobalt as a result.

However, the U.S. Securities and Exchange Commission notified Cobalt in March that it had initiated an informal inquiry regarding the company related to the Sonangol Research and Technology Center. Cobalt was required to make social contributions to Sonangol including the technology center as part of its Block 20 purchase and sale agreement.

On Feb. 8, Cobalt was notified by the NYSE that the company is not in compliance with continued listing standards. Cobalt’s 30-day average closing share price as of Feb. 27, 2017, was $0.94. The standard requires the trailing 30-day average closing share price to remain above $1.

On March 15, the stock was trading at $0.42 about an hour before the markets closed.

Cobalt Asset Updates

Cobalt is staying focused on what Cutt called the cornerstone of the business: North Platte in the GoM. Recent appraisal work has firmed up recoverable resource estimates of more than 500 million barrels at the deepwater field in which Cobalt holds a 60% operated interest.

Plans are underway to drill a second sidetrack updip to core and gather fluid samples. The work is expected to be finished in the second quarter.

This will follow news that the North Platte #4 appraisal well hit 650 ft of net pay with no water contact. Its sidetrack well, drilled just over a mile north of the appraisal well, hit oil. Some sands had water contact, Cutt said, but the results confirm Inboard Lower Tertiary reservoir quality sands across the field’s eastern flank. At a measured depth of nearly 38,000 ft, the sidetrack was described by Cutt as the longest and deepest well in the GoM.

He called the asset, located in the Garden Banks area offshore Louisiana, a “wonderful asset.”

“We now have wells on the east, west and north,” Cutt said, noting the company doesn’t have much information on the south and don’t believe this is needed to make an investment decision.

With money tight, Cobalt is mulling whether to reach out to third parties to build or pay for the subsurface facilities at North Platte. Marketing 20% or more of North Platte is also on the table to generate much-needed cash.

“This option could be exercised as soon as the second quarter when the second sidetrack operations are complete,” he said.

North Platte has already generated interest from multiple companies. But Cobalt wants to hold on to as much of the asset as it can.

Cobalt’s love for Shenandoah doesn’t run as deep. The door is already open to companies wanting a piece of Walker Ridge-area Shenandoah, where Cobalt owns a 20% non-operated working interest. The company has opened a virtual data room and the physical data room is set to open April 1.

Cutt called Shenandoah, which is operated by Anadarko Petroleum Co. (NYSE: APC), a “great field” and voiced excitement for the field’s fifth appraisal well hitting 1,000 ft of pay in 2016, making it likely that the field will be developed. Appraisal drilling continues amid ongoing FEED engineering for a semisubmersible development concept, Anadarko said in its latest operations report.

“We’re sidetracking now downdip to a different location to identify water contact. We feel like Shenandoah is a great asset,” he said before comparing Shenandoah to North Platte and Anchor, another GoM asset in which Cobalt has a stake. “It’s just that the size and the upside of the asset is not as good as we see in the other two. We believe there are buyers out there for Shenandoah. We’d like to move it.”

Proceeds

Cobalt hopes to use money from a sale of Angola and Shenandoah interests to further development of both North Platte and Anchor, where operator Chevron Corp. (NYSE: CVX) recently struck 800 ft of net oil pay in Inboard Lower Tertiary reservoirs during Anchor #4 appraisal drilling operations.

While Cobalt holds a 20% interest in the Anchor discovery unit, it has a 100% working interest in the south flank of Anchor, outside the unit. The block is in the GoM’s Green Canyon area.

“We believe up to a third of that resource base sits on our 100% block,” Cutt said. “So we’re going to work in a positive way with the operator and with BSEE [Bureau of Safety and Environmental Enforcement] to see how we can get that unitized.”

Final investment decisions have not been announced for the three developments. Cobalt anticipates first production from Anchor sometime between 2020 and 2023; and from North Platte by 2022.

“We’re trying to hold on to it as much as we can. We’ll see how things go on Shenandoah. We’ll see how things progress in Angola,” he said. “At the end of the day, we hold North Platte as a potential opportunity for us for other farm downs or for sell, if we absolutely got to that point.”

Considering keen interest from the market, Cutt said if some or all of it was put on the market, it could go quickly.

Good news—for Cobalt or a potential buyer—is that forecasts show there will be a need for oil as global demand inches higher. Cutt referred to outlooks that there could be a supply shortage, incapable of even being met by shale plays by 2020.

“Purchasing discovered and appraised barrels will shore up access to long-term resource without taking on exploration risk or the long lead times required to actually make the discoveries organically,” Cutt said. “This along with the fact that deepwater continues to play an important role in filling the supply gap bodes well for us.”

Darren Barbee can be reached at dbarbee@hartenergy.com. Velda Addison can be reached at vaddison@hartenergy.com.