LONDON (Alliance News) - Xcite Energy Ltd Tuesday said it continued to generate negative cashflow in the first quarter of 2016, and reported a wider loss for the period as the company continues hold discussions in attempt to renegotiate the terms of its bonds.
Xcite has debt maturing at the end of June and is holding discussions with its bondholders about changing the terms of its bonds. Xcite has paid all interest due under the bond to date and met all of its covenants, and although it has placed the remaining coupon interest into an escrow account in preparation for the upcoming payment, it doesn't believe it can repay the capital in full on time.
"The group's current and forecast cash position is insufficient to repay the bond capital in full by June 30, 2016 and, accordingly, it continues its discussions with the principal bondholders in order to develop financial flexibility for the group as it continues its efforts to secure a development financing package that meets its long-term field development funding requirements, in addition to the funds required for the settlement in full of the bonds," said Xcite.
With no guarantee that the bondholders will be willing to assist Xcite and the need for even further funds to keep progressing its development work, the company said there is "material uncertainty" about its ability to survive, but said it has a "reasonable expectation" to keep going for the foreseeable future.
Xcite wants to renegotiate the terms of its debt to give it more flexibility to allow the company to continue developing the Bentley field in the UK North Sea, which will need a partner in order for the development to progress.
The company has agreed the principal commercial terms for the development funding proposals for the development, which will be sourced by an incoming partner. However, the ability to find a new partner willing to put money into the asset is, yet again, not guaranteed.
Despite not securing funding or a partner, Xcite has progressed the tender process to select contractors for the field development, but said it is continuing to review opportunities to reduce costs which may change the contractor group and the funding proposals for the field.
Xcite booked a net loss of USD900,000 in the first three months of 2016, wider than the USD500,000 loss a year earlier, and a net cash outflow from operations of USD1.1 million in the quarter compared with outflows of USD2.3 million a year earlier.
The loss per share was 0.29 cents compared to 0.15 cents.
Investing activities also generated net cash outflow of USD1.4 million, but that too was better than the USD2.9 million outflow a year earlier.
Cash at the end of March stood at USD14.1 million, dropping from USD20.8 million at the end of 2015 and from USD24.4 million at the end of March 2015. Current liabilities at the end of March amounted to USD140.8 million, which has risen from USD138.1 million at the end of 2015 and from only USD4.5 million at the end of March 2015.
Some of that cash will be ring-fenced for the interest due under its bond. In March, Xcite said it had put aside USD8.3 million to cover that interest payment due next next month.
Xcite shares were down 4.8% to 12.38 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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