The gloom over the oil and gas sector continues to deepen, with Singapore-listed KrisEnergy now exploring asset sales and share issuance to ease its financial stress.
In its weekend results announcement, the mainboard-listed producer warned, in effect, that it may face issues with its creditors.
It said some of its covenants under existing debt instruments "may come under stress". A covenant refers to a set of restrictions that a bank imposes in a debt agreement with a borrower.
While KrisEnergy has not yet breached its covenant, the firm is aware of the financial obligations lying ahead, chief financial officer Kiran Raj told The Straits Times.
"Acknowledging what our capital requirements are for the next 12 to 18 months, which include potentially the refinancing of our notes, our board is looking at all options, including (the issuance of) equity and equity-linked instruments, as well as asset divestment," he added. The amount to be raised is up to US$150 million (S$201 million) by this year end.
Mr Raj was referring to two outstanding KrisEnergy bonds: $130 million, 6.25 per cent notes due on June 9, 2017, and $200 million, 5.75 per cent notes due on Aug 22, 2018.
KrisEnergy's net loss, in million US dollars, for the three months to June 30.
KrisEnergy's loss, in million US dollars, for the first half year.
KrisEnergy reported a negative working capital position as at June 30, after the reclassification of the debt due in 2017 as current liabilities.
It was also hit by a US$25.21 million net loss for the three months to June 30, which led to a US$43.52 million loss for the first half year. The quarter ended with net negative operating cash flows of US$22.45 million.
KrisEnergy became the latest name to face market scrutiny over the oil and gas turmoil following Swiber Holdings' woes.
KrisEnergy has 19 contract areas - essentially oil and gas fields. If needed, the ones where it has high or full working interest may be tabled for divestment and capital-raising.
With a strategic investor like Keppel Corp, I don't see KrisEnergy going Swiber's way.
KGI FRASER SECURITIES ANALYST JOEL NG
"For instance, our Udan Emas block in East Indonesia, we have 100 per cent working interest; in our Bala-Balakang block we have 85 per cent working interest… Blocks that we have a large interest in, we will always look for partners to bring us down to the 50 per cent range," the firm's business development director Richard Lorentz said.
Keppel Corp, which owns 40.5 per cent of KrisEnergy, may also come to its rescue. Mr Raj said Keppel is represented on KrisEnergy's board, which does not rule out a private placement as one of the equity options for capital raising.
He thanked Keppel for "nurturing KrisEnergy's relationship with DBS". This may refer to the fact that in June, KrisEnergy transferred to DBS a US$108.3 million revolving credit facility, which was upsized last month to US$148.3 million.
A DBS spokesman said: "This revolving credit facility is the only loan we have granted to Kris- Energy. The facility is underpinned by a credit enhanced structure and is fully secured." Keppel Corp declined to comment.
The affiliation with Keppel is a bright spot, KGI Fraser Securities analyst Joel Ng said.
"With a strategic investor like Keppel Corp, I don't see KrisEnergy going Swiber's way. But... with a stressed balance sheet and weak cash flow, the outlook is not very positive for at least the next six months."
KrisEnergy shares yesterday slid 0.3 cents or 2.42 per cent to 12.1 cents.
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