Caza Oil and Gas has revealed it is in advanced negotiations with a proposed financing partner to establish a new funding structure.
Fresh financing would allow the company to wind up its debt arrangement with investment fund Apollo and repay Yorkville Advisers.
Funding would also provide sufficient additional capital for Caza to continue developing its Bone Spring assets in New Mexico.
Negotiations have continued to progress with a counterparty, which has been granted a short period of exclusivity in connection with the talks.
Caza, said: “Given the number of conditions to the consummation of the potential transaction, there can be no certainty that the potential transaction will be concluded on acceptable terms.
“If the potential transaction is consummated, it is likely to take the form of an equity investment in the company which, given the current oil and gas commodity pricing environment, is likely to subject the company’s existing shareholders to significant dilution.”
As reported in its recent unaudited financial results the outstanding balance of the Apollo facility remains at $45million.
Apollo agreed to forbear from exercising certain of its rights and remedies with respect to the Caza’s breach of certain financial and other covenants until October 31. If Apollo deems that Caza is not complying with this obligation then it can bring forward the end to the forbearance period to October 15.