Circle Oil PLC Financial and Operational Update (8890I)
December 14 2015 - 2:00AM
UK Regulatory
TIDMCOP
RNS Number : 8890I
Circle Oil PLC
14 December 2015
14 December 2015
CIRCLE OIL PLC
("Circle" or the "Company")
Financial and Operational Update
Financial Update
On 29 September 2015 Circle announced its interim financial
results, noting that it had reached agreement in principle with
International Finance Corporation ('IFC') to extend its Reserve
Based Lending (' RBL') facility by one year to June 2019. Since
that date, discussions have continued with a view to finalising the
relevant documentation with IFC. However to date, although progress
is being made, the process has not progressed as quickly as
envisaged.
Despite Circle's low cost operations, trading remains very
challenging due to a further weakening of global oil prices,
varying production levels in NW Gemsa and the impact of macro
events on payments from EGPC. As a result, and in conjunction with
both the RBL extension and the December 2015 redetermination,
discussions are ongoing regarding the borrowing base of the RBL
facility under which $57.5 million is currently drawn. Following
the redetermination the Company expect the borrowing base to be
reduced and as a result there will be a moderate shortfall,
although both parties are actively engaged in constructive dialogue
to find a solution.
In light of the above, Circle is considering a number of options
including a debt restructuring and/or an equity raise to right-size
the balance sheet and ensure that the Company has sufficient cash
flows to fund operations. The Board is working towards implementing
any such transaction(s) by the end of the first quarter of
2016.
A further update will be provided in due course.
Operational Update
Morocco
Following completion of the successful drilling campaign in
Morocco, the drilling rig has now been released and Circle's
subsurface team are in the process of reviewing the well data from
the campaign. The final two successful wells have now been tied
back to Circle's existing production infrastructure and commenced
production on 9 December 2015. It is the Company's intention to
recommence drilling in Morocco in Q4 2016.
Circle is pleased to announce the appointment of Lonny
Baumgardner as the Country Manager for Morocco. Lonny brings with
him a wealth of experience in managing and growing oil and gas
businesses in North Africa, having worked for both Trans-Globe
Energy and Vegas Oil & Gas. Circle would like to thank Marcel
Lensvelt (the interim Country Manager since April 2015) for his
significant contribution to re-invigorating the Company's business
in Morocco.
Egypt
In Egypt, Circle, its partners and the Government signed a
Processing & Treatment Agreement which sets out the framework
under which the participants in the NW Gemsa field will be paid for
gas sales since February 2013. As at 30 June 2015, Circle's trade
and other receivables stood at $25.3 million, of this approximately
$2 million was attributable to gas sales.
Operationally, the workover campaign aimed at managing the field
as it matures is nearing completion and has informed the design of
the next drilling programme which commenced on 7 December 2015 with
the spudding of the AASE-23 well. This will be the first of two new
producing wells to be drilled with the objective of increasing
production levels.
Tunisia
As stated previously, the farm-out process for the Company's
Mahdia permit is ongoing. While the market for farm downs has been
impacted by the overall decline in the sector, Circle is engaged in
discussions with a number of companies in relation to Mahdia. The
Company will provide a further update on the process in due
course.
For further information contact:
Circle Oil Plc (+44 20 7182 4913)
Mitch Flegg, CEO
Investec (+44 20 7597 5970)
Chris Sim
George Price
James Rudd
Murray (+353 1 498 0300)
Joe Heron
Pat Walsh
Notes to Editors
Circle Oil plc (AIM: COP) is an international oil & gas
exploration, development and production company holding a portfolio
of assets in Morocco, Tunisia, and Egypt with a combination of
low-risk, near-term production, and significant upside exploration
potential. The Company listed on AIM in October 2004.
Internationally, the Company has assets in the Rharb Basin,
Morocco; the Ras Marmour Permit in southern Tunisia; the Beni
Khalled permit in northern Tunisia, the Mahdia Permit offshore
Tunisia and the NW Gemsa permit in Zeit Bay area of Egypt.
Circle Oil's strategy is to locate and secure additional
licences in prospective hydrocarbon provinces and, through targeted
investment programmes, monetise the value in those assets for the
benefit of shareholders. This could be achieved through farm-outs
to selected partners who would then invest in and continue the
development of the asset into production, or Circle Oil may opt to
use its own expertise to appraise reserves and bring assets into
production, generating sustained cash flow for further
investment.
Further information on Circle Oil is available on its website at
www.circleoil.net.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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