LONDON (Alliance News) - Independent Resources PLC on Tuesday said it has entered into arrangements which will see its debt reduced by around GBP500,000, and the AIM-listed oil and gas company noted plans were now in place to reduce its cash costs substantially over the next year.
Independent Resources said it had issued 34.0 million shares to one of its trade creditors at a price of 0.25 pence per share, in payment of GBP87,0000 of indebtedness, and a further GBP211.0 million shares to further trade creditors at a price of 0.10 pence per share, in payment of GBP210,989 of indebtedness.
Shares in Independent Resources were up 15% at 0.0977p on Tuesday morning.
The company said the total number of shares issued to creditors represent 36.9% of the enlarged issued share capital.
Independent Resources also noted that it has identified "substantial cost saving measures" which it intends to implement over the next six months. The company said these measures will result in the company incurring cash costs of approximately GBP700,000 over the next 12 months, commencing May 1, compared to its current level of approximately GBP1.2 million per year.
Independent Resources said it has set a target of ongoing average monthly cash expenditure of no more than GBP50,000 per calendar month from November 2016 onwards until it has achieved the "financial strength necessary to enable it to incur higher levels of cash costs".
These measures include reducing employee costs, lowering office costs and various employees and contractors being paid in shares over the next 12 months.
As previously announced, the company said its directors have accepted payments totalling GBP202,000 in shares for past services, in principle, at a price to be agreed. It is intended that the price, however, will be at a "significant premium to the pre-announcement share price of 0.085 pence per share", Independent Resources said. This will further reduce the company's debt, Independent Resources added.
The directors and a third party consultant have also agreed to accept payments in shares for the services for the 12 months commencing April 1, 2016, expected to total GBP408,000, Independent Resources said, with the price also to be at a "significant premium", to the pre-announcement share price.
Independent Resources noted that its Independent Resource Egypt Ltd joint venture vehicle with Nostra Terra Oil & Gas Company PLC has continued to make progress on the registration process with the Egyptian Government. This will allow it to receive its share of the East Ghazalat revenues from July, 1, 2015. The joint venture owns a 50% interest in the East Ghazalat concession in Egypt.
"The debt reduction, together with the substantial reduction in cash costs which we intend to achieve puts the company on a sounder financial footing. The company remains committed to generating positive cash flow from its existing asset base and continues to seek sources of finance to support its current operations and to acquire assets which meet demanding risk adjusted returns," said Independent Resources Chief Executive Greg Coleman.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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