Cabot Energy warns failure to raise funds will cast 'significant doubt' about future
Source - SMW
Cabot Energy on Friday raised concerns after admitting it was facing 'material financial uncertainty' as efforts to raise funds to pay debts were not entirely within its control.
The company said that it was 'reasonably' optimistic of raising the funds as talks with shareholders were concluding, but warned that failure to do so would raise 'significant doubt' about its future.
'The Directors are reasonably optimistic that the company can raise debt and additional equity funding from existing and new shareholders, as it has done in the past, but it is not wholly within the company's control and as such represents a material financial uncertainty,' the company said.
The company required about US$3m to settle the 'material' overdue Canadian trade creditors and certain creditors in the UK as well as provide short term working capital through to the end of first of the quarter 2019.
A successful fundraise would then pave the way for the company to approach the market again, probably in the early second quarter of 2019, for a further debt and equity funding to ramp up business growth, Cabot added.
Cabot Energy also said the spread between the West Texas Intermediate benchmark crude price and the Edmonton Light Oil benchmark price from December 2018 onwards had been restored to normal historical levels, with Edmonton at 8%-10% below WTI on average.
The restoration was largely due to 'the positive impact on the Edmonton price of the temporary restriction on oil production mandated by the Alberta government announced on 2 December 2018,' the company said.
'This is expected to lead to a further improvement in the average sale price per barrel of oil received by the Company. The cuts, which began on 1 January 2019, do not impact Cabot Energy due to an exemption each producer receives for their first 10,000bbl/d of production.' At 9:53am: (LON:CAB) Cabot Energy Plc share price was 0p at 0.48p