LONDON (Alliance News) - Shares in RusPetro PLC dropped Thursday after it said it will seek shareholder approval to cancel its listing on the London Stock Exchange's Main Market and re-register as a private limited company, saying it will have a better chance of achieving the funding it needs in this form.
RusPetro noted that, since completing a major capital restructuring towards the end of 2014, it had successfully increased production. However, the price of Brent crude oil has decreased substantially, to around USD53 a barrel in 2015 from around USD100 a barrel the year before.
RusPetro reported a pretax loss of USD108.7 million for 2015, narrowed from a loss of USD263.4 million in 2014, on revenue of USD43.9 million, down from USD55.1 million, mostly as a result of a lower foreign exchange loss. The fall in revenue was driven by the steep decline in the oil price, RusPetro said, which offset a 16.5% increase in the volumes sold during 2015.
The company said its 2015 net cash outflow from operating activities was USD4.7 million, compared to a net positive of USD3.3 million the year before, and its net cash outflow from investing activities was USD35.2 million. This means it has a deficit of USD39.9 million before loan repayments, interest paid and other financing charges of USD24.7 million.
"The 2015 full year results demonstrate that the group is not generating sufficient cash from its current operations to cover the cost of capital investment, interest payments on loans outstanding and loan repayments due in the future," RusPetro said.
RusPetro said that is its not presently in breach of its existing secured facilities, and has USD67.7 million of undrawn facilities available.
However, after modelling various scenarios, RusPetro believes it will need significant additional funding over and above its existing facilities and forward sale arrangements in the next two years. It is of the view that the funding necessary to achieve its objectives is "currently not available" in the public equity markets.
It believes it will have a better chance at securing this funding as a private limited company, and said that "not having a listing would enable the company to open discussions with investors who are able to take a longer-term view of the company's prospects and those of the oil and gas sector rather than with investors focused on the short term issues that affect illiquidity and volatility in the share price as a quoted entity."
Shareholders will vote on the proposal May 5, and if approved RusPetro expects its trading to be cancelled on or around June 6.
Elsewhere the company outlined plans to double its production levels in 2016, as well as continuing to drive its cash production operations costs lower.
"In 2015, we have established the technical and cost building blocks for a sustainable operating business in a low cost environment. However, given our balance sheet and development capital requirements, this in itself will not guarantee the long-term sustainability of the business," said Chief Executive Officer John Conlin in a statement.
Shares in RusPetro were down 76% at 1.00 pence Thursday morning, the biggest faller on the London market by some distance.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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