LONDON (Alliance News) - Nighthawk Energy PLC shares dropped on Friday after its lender reduced the amount the company can borrow under its existing credit facilities, which will require the company to repay a large chunk of its outstanding debt.
Nighthawk shares were trading down 10% to 1.77 pence per share on Friday morning.
The provider of Nighthawk's reserve-based lending facility, the Commonwealth Bank of Australia, has redetermined that Nighthawk should only be able to borrow a maximum of USD13.0 million, reducing the limit from the previous USD23.0 million.
Nighthawk said the new limit reflects the subdued oil price.
Importantly, Nighthawk has already drawn down all USD23.0 million of its facility, meaning it now needs to repay USD10.0 million to its lender in order to be within its new borrowing base.
Nighthawk said it only has USD2.0 million in cash, forcing it to begin "exploring options" with its lender about how to settle the deficit.
The company is confident it can resolve the deficit by April 16, which is the date to which the lender has waived Nighthawk's covenants until in order to allow Nighthawk to come up with a solution.
"The company expects that the new banking arrangements will be agreed by April 16, 2016 and a further announcement will be made at the appropriate time," said Nighthawk.
In a further blow, Nighthawk said production in the first two months of 2016 was lower than a year earlier.
Net production in January amounted to 43,915 barrels of oil before production declined to only 40,809 barrels in February, representing a 7.1% month-on-month decline.
Production in both months was also considerably lower than a year earlier, with net production amounting to 52,183 barrels of oil in January 2015 and 45,843 barrels of oil in February 2015.
Nighthawk said the month-on-month decline experienced between January and February this year was not as steep as the month-on-month decline experienced in 2015 due to its project to enhance recovery levels and because of better-than-expected recovery levels at the Arikaree Creek field in the US state of Colorado.
In terms of year-on-year declines, production in January was down 16% whilst production in February was down 11%.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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