Resaca Exploitation Inc Corporate Update (1490M)
September 13 2012 - 2:01AM
UK Regulatory
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 2012.
The Company is currently exploring a variety of strategic
alternatives, including the possible sale of a number of its
assets, with the aim of reducing indebtedness and bringing the
Facilities into compliance. Further announcements as to progress in
this regard will be made as and when appropriate.
Resaca's third party reserve engineers are currently finalizing
their annual reserve studies on the Company's properties as of 30
June 2012. Resaca expects to receive the final reports from its
engineers and provide a reserve update by the end of September. The
Company does not expect a material change in its 3P reserves as
compared to its 3P reserves as of 31 December 2011.
The Company expects to release its annual audited results for
the fiscal year ended 30 June 2012 by mid October.
J.P. Bryan, Resaca Chairman and CEO commented
"While we are disappointed that we need to reduce our production
goals for the year ending 30 June 2013 and continue to be in
non-compliance on our credit facilities, we continue to believe in
the value of our long-lived, oil weighted properties. We are
considering all possible alternatives to address the non-compliance
with our credit facility covenants, with the ultimate aim of easing
our capital constraints and therefore being able to increase
production rates."
For further information please contact:
Resaca Exploitation, Inc.
J.P. Bryan, Chairman and Chief Executive
Officer +1 713-753-1300
John J. ("Jay") Lendrum, III, Vice Chairman +1 713-753-1400
Dennis Hammond, President and Chief
Operating Officer +1 713-753-1281
Chris Work, Chief Financial Officer +1 713-753-1406
Buchanan (Investor Relations) +44 (0)20 7466 5000
Tim Thompson
Helen Chan
Ben Romney
finnCap Limited (Nomad and Broker) + 44 (0) 20 7220 0500
Matt Goode, Corporate Finance
Christopher Raggett, Corporate Finance
Victoria Bates, Corporate Broking
About Resaca
Resaca is an independent oil and gas development and production
company based in Houston, Texas. Resaca is focused on the
acquisition and exploitation of long-life oil and gas properties,
utilizing a variety of primary, secondary and tertiary recovery
techniques. Resaca's current properties are located in the Permian
Basin of West Texas and Southeast New Mexico. Additional
information is available at www.resacaexploitation.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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