14 Dec 2015 07:00
14 December 2015
CIRCLE OIL PLC
("Circle" or the "Company")
Financial and Operational Update
Financial Update
On 29 September 2015 Circle announced its interim financial results, noting that it had reached agreement in principle with International Finance Corporation ('IFC') to extend its Reserve Based Lending (' RBL') facility by one year to June 2019. Since that date, discussions have continued with a view to finalising the relevant documentation with IFC. However to date, although progress is being made, the process has not progressed as quickly as envisaged.
Despite Circle's low cost operations, trading remains very challenging due to a further weakening of global oil prices, varying production levels in NW Gemsa and the impact of macro events on payments from EGPC. As a result, and in conjunction with both the RBL extension and the December 2015 redetermination, discussions are ongoing regarding the borrowing base of the RBL facility under which $57.5 million is currently drawn. Following the redetermination the Company expect the borrowing base to be reduced and as a result there will be a moderate shortfall, although both parties are actively engaged in constructive dialogue to find a solution.
In light of the above, Circle is considering a number of options including a debt restructuring and/or an equity raise to right-size the balance sheet and ensure that the Company has sufficient cash flows to fund operations. The Board is working towards implementing any such transaction(s) by the end of the first quarter of 2016.
A further update will be provided in due course.
Operational Update
Morocco
Following completion of the successful drilling campaign in Morocco, the drilling rig has now been released and Circle's subsurface team are in the process of reviewing the well data from the campaign. The final two successful wells have now been tied back to Circle's existing production infrastructure and commenced production on 9 December 2015. It is the Company's intention to recommence drilling in Morocco in Q4 2016.
Circle is pleased to announce the appointment of Lonny Baumgardner as the Country Manager for Morocco. Lonny brings with him a wealth of experience in managing and growing oil and gas businesses in North Africa, having worked for both Trans-Globe Energy and Vegas Oil & Gas. Circle would like to thank Marcel Lensvelt (the interim Country Manager since April 2015) for his significant contribution to re-invigorating the Company's business in Morocco.
Egypt
In Egypt, Circle, its partners and the Government signed a Processing & Treatment Agreement which sets out the framework under which the participants in the NW Gemsa field will be paid for gas sales since February 2013. As at 30 June 2015, Circle's trade and other receivables stood at $25.3 million, of this approximately $2 million was attributable to gas sales.
Operationally, the workover campaign aimed at managing the field as it matures is nearing completion and has informed the design of the next drilling programme which commenced on 7 December 2015 with the spudding of the AASE-23 well. This will be the first of two new producing wells to be drilled with the objective of increasing production levels.
Tunisia
As stated previously, the farm-out process for the Company's Mahdia permit is ongoing. While the market for farm downs has been impacted by the overall decline in the sector, Circle is engaged in discussions with a number of companies in relation to Mahdia. The Company will provide a further update on the process in due course.
For further information contact:
Circle Oil Plc (+44 20 7182 4913)
Mitch Flegg, CEO
Investec (+44 20 7597 5970)Chris SimGeorge Price
James Rudd
Murray (+353 1 498 0300)Joe Heron
Pat Walsh
Notes to Editors
Circle Oil plc (AIM: COP) is an international oil & gas exploration, development and production company holding a portfolio of assets in Morocco, Tunisia, and Egypt with a combination of low-risk, near-term production, and significant upside exploration potential. The Company listed on AIM in October 2004.
Internationally, the Company has assets in the Rharb Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the Beni Khalled permit in northern Tunisia, the Mahdia Permit offshore Tunisia and the NW Gemsa permit in Zeit Bay area of Egypt.
Circle Oil's strategy is to locate and secure additional licences in prospective hydrocarbon provinces and, through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle Oil may opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.
Further information on Circle Oil is available on its website at www.circleoil.net.