Resaca = Headache !!!!! (Spanish)13 Sep 2012 09:52
TIDMRSOX
RNS Number : 1490M
Resaca Exploitation Inc
13 September 2012
for immediate release 13 SEPTEMBER 2012
Resaca Exploitation, Inc.
("Resaca" or "the Company")
Corporate Update
Resaca (AIM:RSOX), the oil and natural gas production, exploitation, and development company focused on the Permian Basin in the USA, announces an update on certain corporate matters.
As announced in the Company's interim results release on 30 March 2011, the Company has not been in compliance with certain financial covenants, under both our subordinated credit facility and our senior credit facility (the "Facilities"). We have not been in compliance with the debt to EBITDA ratio and the EBITDA to interest ratio covenants of the subordinated facility, which caused us to also be in non-compliance with our senior facility and the non-compliance has required classification of these Facilities as current assets on our balance sheet, in turn causing a failure of the current asset to current liability ratio covenant of both Facilities. As a result of the covenant non-compliance, the Company is currently unable to draw down further funds from the senior facility and the resulting capital constraints limit the Company's ability to increase its production and operating cash flows sufficiently to bring these Facilities back into covenant compliance. As a result of the covenant non-compliance, the interest rate on the Company's subordinated facility has increased by 2 per cent to 14 percent and the interest rate on the Company's senior facility by 3.5 percent to 7.5 percent since May and September, respectively. At 30 June 2012, the Company's net indebtedness was approximately $57 million.
Since the Company drew the remaining balance available under its senior credit facility in February 2012, the Company's capital projects have been limited to those projects that can be funded through operating cash flow. With this limited capital, the Company has focused on maintaining and increasing the scope of its waterflood operations at its Copper Jal, Langlie Jal and Edwards Grayburg properties where the Company has received favorable waterflood performance. For the twelve months ended 30 June 2012, the Company's production averaged 716 barrel of oil equivalents per day ("boepd"). However as a result of the capital constraints detailed above, the Company is not now anticipating being able to increase its production levels to its previous targets, which were in excess of 1,000 boepd for the twelve month period ending 30 June 2013. The Company now anticipates that total production for the year will remain broadly constant with the production rates achieved in the previous twelve month period, with a consequential reduction in the company's revenue and profit expectations for the financial period ending 30 June 2013. Since 30 June 2012, the Company's production averaged 740 boepd in July and 741 boepd in August 201
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