Stratic Energy, which just two months ago sounded a warning on its ability to continue to operate as a going concern, gave an update on its finances yesterday.
It announced loan facility amendments with its banking syndicate, including an additional line of credit.
The Canadian-incorporated international oil and gas business has its principal interests in the UK and Dutch North Sea, plus Italy, Turkey and Syria.
Yesterday’s amendments involve deferral of year-end 2009 scheduled debt repayments of about £15.4million until receipt of the proceeds of the previously announced sale of its Italian business, expected around the end of the first quarter.
The additional credit line, for about £6.2million and available for general corporate purposes, is also to be repaid from the proceeds of the sale.
At the end of last year, Stratic had cash of about £3.7million and outstanding loans from its banks of £29.6million.
Chief executive Kevin Watts said yesterday: “The new banking arrangements provide us with increased near-term flexibility to pursue our ongoing investment programme. We are therefore pleased to have finalised these agreements, which are in line with the bank discussions we reported as part of our third-quarter 2009 results announced in November last year.”
Stratic achieved net income of £7.94million for the third quarter of 2009 compared with losses of £7.88million a year earlier.
Income for the latest period included a gain on the sale of its Breagh assets in the UK of £13.64million. Stratic said then that gross proceeds of £34.4million were received from the sale and had been used mainly to pay down bank and other debt. It also said the sale of its Italian business to Enel for £30.85million was expected to complete late in the first quarter of 2010. Mr Watts said at the time of the third-quarter results: “Once the sale completes we will have raised more than £69.7million from asset disposals, and we will have significantly improved our balance sheet and financial flexibility.”
The company said then, however, it did not have sufficient liquidity to meet its expenditure obligations and debt repayments due at the end of 2009, and its ability to continue to operate as a going concern depended on the availability of new equity, the timing of anticipated cash flows including from disposals, and the continuing support of its bankers.