LONDON (Alliance News) - New World Oil and Gas PLC shares dropped on Tuesday after it said it needs to secure partners for both its exploration projects to cut its capital expenditure burden in light of lower oil prices if it wants to progress them.
New World is focused on developing its exploration projects in Belize and Denmark, but the company said it is likely to relinquish its Danish license if it can not find a partner.
New World shares were down 6.7% to 0.0630 pence per share on Tuesday morning.
"The company is not immune from the market situation, as seen by the challenges of finding new partners for our exploration projects, but our recent fundraising efforts have left us in a good position with no significant forward commitments," said Chairman Georges Sztyk.
During the first half of 2015, the company raised GBP3.5 million from new and existing investors through a placing and open offer which will allow it to "consider ways of moving New World forward", it said.
In Belize, the company is looking to drill a new well at the Blue Creek project if it can secure a partner. It has already identified where it wants to drill the well on the C prospect which would allow any drilling to happen quickly if a partner is found.
New World is racing to find a partner before the production sharing agreement which covers the project expires on October 12, and the company said it will consider "possibly" re-applying for the PSA if it expires before it secures a partner.
In Denmark, New World has been granted extensions to complete its work programme over its three licenses until September 15. The company has been in discussions with potential farm-in partners for the Danica Jutland and Danica Resources projects in the country.
"The board maintains its belief that there is significant prospectivity within these licences but in the current oil price environment does not believe that its existing funds would be best allocated to advance these projects without a farm-in partner," said Sztyk.
"Accordingly, if farm-in discussions are not successful, the board is likely to recommend relinquishing the licences and appropriate accounting provisions have been made," he added.
The company said it has looked at around seven new opportunities in the first half of the year and said it would happily enter into non-binding letters of intent to permit the company to evaluate projects in the oil field enhancement space. The funds raised from the placing and open offer will be utilised for potential new opportunities.
"With funding in place, a committed management team and potential new opportunities in addition to the group's existing portfolio, we remain hopeful for the remainder of 2015 and the opportunities it will bring to us and our loyal shareholder base," said Sztyk.
The company reported a USD1.4 million pretax loss in the first six months of 2015, narrowing from the USD1.9 million loss reported a year earlier.
That loss comprised of USD550,000 in impairments compared to nil a year earlier, offset by administrative costs dropping to USD661,000 from USD1.7 million and legal costs dropping to USD200,000 from USD243,000.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.