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Challenger Energy Plc shares fall as it confirms capital needs

“The company is presently operating with a balance sheet characterised by an unacceptably high level of historic liabilities and payables. The immediate priority during the remainder of 2021 is for this to be addressed.”

() saw its shares fall on Monday as interim financial results confirmed the explorer requires recapitalisation and is working to negotiate creditor settlements.

The company, formerly known as Bahamas Petroleum, said it had US$3mln of cash resources at the end of October and it needs at least US$15mln of new funds to meet its obligations as they fall due over the coming twelve months.

Specifically, results for the six months ended June 30, noted that some US$10.1mln of invoices related to the unsuccessful Perseverance-1 well still needed to be paid, and it had a further US$3.5mln due to various suppliers in Trinidad and Tobago – it said that the latter in-country creditor balances are largely being managed within agreed payment deferrals and payment plans, they are owed by various Trinidadian subsidiaries and are not guaranteed by the company).

A further US$6.5mln is described as ‘representing the full amount of various legacy licencing and other payables in Trinidad and Tobago’ and the company said that they are owed by subsidiaries, not guaranteed by the company, and portions of those amounts are disputed – and some US$4.5mln can be avoided by the forfeiture of certain non-productive assets).

“The company is presently operating with a balance sheet characterised by an unacceptably high level of historic liabilities and payables. The immediate priority during the remainder of 2021 is for this to be addressed,” the company said.

“However, beyond this immediate hurdle, the company has a clear opportunity to rebuild value, particularly in the context of continued rising oil prices.

“The current level of (significantly reduced) corporate overhead means that the company, if unburdened of its current payables overhang should be able to operate on a self-sustaining basis in 2022, relying on just the existing baseline production.”

At operations level, the company noted that amid rising oil prices and cost control the company’s sustained baseline production achieved a position of being breakeven on a monthly basis.

The company reported a US$12.2mln loss for the six-month period.

In London, Challenger shares were down 27% to change hands at 0.83p.

 

–UPDATED to include share price movement–

Read More: Challenger Energy Plc shares fall as it confirms capital needs

2021-11-01 07:07:00

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