Tullow Oil (LON:TLW) was the sector's biggest faller after announcing the initial pricing terms of its offering of $300 million of convertible bonds due 2021, announced earlier today. The proposed offering will further diversify Tullow Oil's sources of funding and the proceeds will be used for general corporate purposes and to fund capital investment in the Group's assets in West and East Africa. The bonds are issued at par and will have a coupon of 6.625% per annum payable semi-annually in arrears on 12 January and 12 July in each year, with the first interest payment date being 12th January 2017. The bonds will be convertible into fully paid ordinary shares of the company. The initial conversion price will be set at a premium of 30% above the volume weighted average price of an Ordinary Share on the London Stock Exchange between opening and closing of the market on 6th July 2016 converted at the prevailing USD:GBP spot rate. Settlement is expected to take place on or about 12 July. Chief financial officer Ian Springett said: "We are very pleased with the result of this bond offer which reflects the confidence that the market has shown in the Group's business and financing strategy. The high level of demand has enabled us to strengthen our balance sheet and diversify our sources of capital." It is intended that an application will be made for the Bonds to be listed on a recognised stock exchange (as such term is defined in section 1005 of the Income Tax Act 2007) prior to the first interest payment date (expected to be 12th January 2017) - expected to be the Channel Islands Stock Exchange.
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Exillon Energy's (LON:EXI) output averaged 14,364 barrels per day in June. Average daily production for Exillon Timan-Pechora was 3,385 bpd, and for Exillon West Siberia it was 10,979 bpd during the period. Peak daily production was 14,812 bpd.
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Bankers Petroleum L(LON:BNK) achieved a second quarter 2016 production average of 15,934 barrels of oil per day (bopd), 8.2% below the first quarter 2016 average of 17,363 bopd. Following a previously announced business interruption at the Petrolifera Italo Albanese ("PIA") Terminal port facility in late May, the Company curtailed production by approximately 4,000 bopd for 5 days due to lack of storage capacity. Production was brought back on-line beginning June 8 and resumed production levels within a week.
In addition, maintenance and optimization of the water disposal system during the quarter further restricted production (approximately 300 bopd over the quarter). The Company continued to optimize production levels and monitor the economic return of all wells in accordance with the current oil price environment.
In the second quarter 2016, oil sales averaged 15,023 bopd, compared to the first quarter sales in 2016 of 17,280 bopd. Crude oil inventory at June 30, 2016 increased to 348,700 barrels compared to 266,000 barrels at March 31, 2016, with the last scheduled cargo of the quarter deferred to the first few days of July.
Bankers' second quarter average oil price was approximately $29.99 per barrel (representing 66% of the Brent oil price of $45.57 per barrel), as compared with the first quarter 2016 average oil price of $21.07 per barrel (representing 62% of the Brent oil price of $33.89 per barrel). Sales to the export market during the second quarter 2016 represented 94% of total sales, at an average export price of 66% of the Brent oil price. Sales prices in the second quarter improved compared to the first quarter of 2016 as the Brent benchmark price climbed back over $40 per barrel and demand increased seasonally for heavy crude oil on both the export and domestic markets.
For the six months ended June 30, 2016, average oil sales were 16,152 bopd (representing 63% of the Brent oil price of $25.22 per barrel) compared 19,899 bopd (representing 75% of the Brent oil price of $57.95 per barrel) for the first six months of 2015.
On April 29, 2016, Bankers added another 1,000 bopd to its existing hedge position for 2016. The Company now has a total of 6,000 bopd under costless collar contracts with an average floor of $51.52 per barrel and an average ceiling of $53.78 per barrel (all prices are referenced to Dated Brent) for the balance of 2016. In the second quarter of 2016, the hedge program generated proceeds of $2.7 million. The remaining 2016 hedge program at June 30, 2016, is valued at $2.2 million. These contracts are designed to protect Bankers against further volatility in oil prices in 2016.
Due to the low oil price environment, Bankers elected to defer drilling activity at the start of the year in order to protect the strength of the Company's balance sheet. Drilling activity will resume as pricing improves and is being reviewed for resumption in the second half of 2016.
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The sector's biggest risers were Stratex International (LON:STI) and Aminex (LON:AEX) - up by more than 8.9% and 8.7% respectively in late trading.
(LON:AEX) Aminex PLC share price was +0.1p at 1.25p
(LON:AUR) Aurum Mining PLC share price was 0p at 0.9p
(LON:BNK) Bankers Petroleum Ltd share price was 0p at 117.5p
(LON:BOR) Borders Southern Petroleum PLC share price was +0.01p at 1.88p
(LON:CHAR) Chariot Oil Gas Ltd share price was +0.08p at 5.7p
(LON:ENQ) EnQuest Plc share price was -1.37p at 30.13p
(LON:EXI) Exillon Energy PLC share price was -0.12p at 97.13p
(LON:GKP) Gulf Keystone Petroleum share price was -0.04p at 4.24p
(LON:GPX) Gulfsands Petroleum PLC share price was 0p at 3.13p
(LON:INDI) Indus Gas Ltd share price was 0p at 210p
(LON:PET) Petrel Resources PLC share price was -0.13p at 6.63p
(LON:RKH) Rockhopper Exploration PLC share price was -2.25p at 31.5p
(LON:RPT) Regal Petroleum PLC share price was 0p at 4.3p
(LON:STI) Stratex International PLC share price was +0.18p at 2.13p
(LON:TLW) Tullow Oil PLC share price was -28.25p at 212.35p
(LON:XEL) Xcite Energy Ltd share price was +0.36p at 8.38p