MTA- sept8 Sep 2015 15:26
on the website.24 July 2015
Matra Petroleum Plc.
Result of Strategic Review
Matra Petroleum Plc. is pleased to it announce the completion of its strategic review and to provide an update on the activities of Matra Petroleum USA (“the Company”), the JV in which Matra Petroleum Plc. holds a 34% share. The Company has entered into a series of transactions to simplify the corporate structure, strengthen the Company’s balance sheet and provide operational certainty.
With the objective of simplifying Company's corporate structure, Eclipse Finance Inc and FirstBorger Oil & Gas Inc have been merged into Matra Petroleum Oil & Gas, the 100% subsidiary of Matra Petroleum USA.
The Company has also agreed a new three year loan agreement with Melody Business Finance LLC (“Melody”) of $20 million. The Loan will be secured against the Company’s equity and has a per annum interest rate of 10% plus the applicable 3-month LIBOR rate. In addition, Melody and the lenders under the Melody Loan Agreement will be granted a warrant to acquire 10% of the common stock of the Company, on a fully-diluted basis, at an exercise price which values the Company’s common equity at $30 million. The warrant is exercisable over three years.
The proceeds from the Melody loan will partly be used to meet the historic obligations of FirstBorger. Firstly, $5 million will be used to pay down the Green Bank Credit Agreement which has now been re-evaluated based on Matra USA’s reserves and taking into account the lower oil price environment. Following the repayment of $5million this fully drawn credit facility stands at $25 million.
The weighted average interest rate of the Company's total debt is 7.5%.
An additional $4 million will be used to meet FirstBorger’s obligation to purchase the 10% Overriding Royalty in the Texas Panhandle assets. The acquisition of the additional 10% Overriding Royalty will add 32bopd to the Company’s net production and increase 1P reserves by 1,472mbbl.
The remaining funds, after transaction costs, will allow the Company to progress the Approved Drilling Program with the aim of doubling current production by the middle of 2016 to 1600bopd net to Company.
Maxim Barskiy, CEO of Matra Petroleum Plc. and Matra Petroleum USA, commented:
“The restructuring of Matra’s investments in the US and the new loan agreement will provide the Company with the ability to continue to grow production and cashflow. With a strengthened balance sheet and a clearer corporate structure, I believe Matra is well placed to manage through the down turn in oil prices.“
For further information, please visit:
www.matrapetroleum.com