Phoenix Global Resources refinances in support of accelerated strategy

Independent Argentina-focussed oil and gas exploration and production company Phoenix Global Resources announced additional funding arrangements to support an accelerated business plan for 2018 on Friday, and provided an operational overview for 2017.

The AIM-traded firm said $100m of its existing bridging and working capital facility from Mercuria Energy Trading, part of the Mercuria Group, was to be converted into new Phoenix shares at 37p per share.

It said the remaining $60m of the existing bridging and working capital facility would be restructured into a new convertible revolving credit facility of $160m from the Mercuria Group, providing additional funds of $100m.

As a result of the debt restructuring, it would make a total of $11m in cash interest cost savings for the remainder of 2018, with the reduced leverage and additional funds supporting its accelerated 2018 business plan.

Capital expenditure was set to increase from approximately $90m in 2017 to up to $190m in 2018, with up to $120m of the capital expenditure to target Vaca Muerta and unconventional projects in the Neuquén basin in 2018.

Pro-forma Argentina production was expected to reach 11,070 boepd for the 2017 full year, with average realised prices of $50 per bbl and $4.1 per mmbtu.

The board said it was continuing to be encouraged by the political climate in Argentina and the government's pro-business and pro-market policy agenda, including tax, labour and capital market reforms.

It said the “significant investment” by many of the world's largest oil and gas companies over the previous two years was testament to those changes, and the attractiveness of the Argentine unconventional oil and gas industry.

Additionally, the de-regulation of the oil price in late September had been a “positive and welcome” development for the industry.

“The additional commitment from Mercuria Group, allows Phoenix to strengthen its balance sheet and accelerate its plans for growth,” said executive chairman Sir Michael Rake.

“Mercuria's support and flexibility reaffirms the positive outlook for Argentina and significant potential of our Vaca Muerta unconventional assets.”

Anuj Sharma, CEO of Phoenix said he was “excited” to announce the company’s accelerated business plan for 2018.

“This business plan will allow Phoenix to further de-risk its highly attractive asset base, bringing the best unconventional technology and expertise to deliver value to its shareholders.”