Australia-listed Tap Oil Limited provide Monday an update on its financing with BNP Paribas and Siam Commercial Bank, and its disputes with Northern Gulf Petroleum Pte Ltd., a Singapore firm that is a subsidiary of North Gulf Petroleum Holdings Ltd. (NGPH) and controlled by Thai entrepreneur Chatchai Yenbamroong.
In February, Tap announced that BNP Paribas and Siam Commercial Bank had agreed to a number of modifications to, and provided Tap with a waiver from compliance with certain agreed minimum liquidity requirements in the Borrowing Base Debt Facility until July 31 so as to provide the Company with additional financial flexibility to meet its forecast financial commitments.
As at July 31, Tap had repaid $22.8 million of the Borrowing Base Debt Facility debt, reducing the outstanding debt balance from $56.1 million. The debt balance is forecast to be reduced to approximately $40 million by the end of the year. Cash on hand as at June 30 is $35.6 million, including restricted funds held in the Borrowing Base Debt Facility accounts with BNP Paribas.
Tap has now reached the end of the waiver period and the Borrowing Base Debt Facility will revert to the previously agreed terms. The default by Northern Gulf on the outstanding carry repayments due to Tap in the first half of 2015, the fall in Tap’s revenue due to continuing low oil prices and the steep debt repayment profile associated with the Borrowing Base Debt Facility continue to put pressure on Tap’s liquidity. The Company continues to assess alternatives to provide further liquidity in order to meet its forecast commitments.
As announced earlier this year, Tap commenced a Strategic Review of the business and asset base in order to respond to the change in market conditions in the oil and gas sector and to maximize value for all shareholders. The review has considered a number of divestment options for assets, including the Company’s flagship Manora Oil Development as well as the Company’s non-core Australian portfolio. There has been considerable interest in the Manora asset. Tap notes that such transactions (if successfully completed) should enable the Company to improve liquidity, reduce debt and potentially allow for the payment of fully franked dividends. The Company expects to finalize the Strategic Review shortly.
At an oil price of between $45-$55/bbl, Tap forecasts net cash flow during 2015 from Manora of approximately $40 to $42 million (after forecast Thai taxes, royalties and operating costs and including the hedging impact, but before repayment of debt).
Application to Set Aside Northern Gulf Statutory Demand
As previously disclosed, Tap expected to make a payment to NGPH during 2015 based on the Operator’s 2P reserves estimate for the Manora oil field as at Dec. 31, 2014 (2P Reserves Deferred Payment).
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