Prairie Provident Provides an Update on Lending Facility
April 21 2020 - 4:52PM
Prairie Provident Resources Inc. ("Prairie Provident" or the
"Company") (TSX:PPR) announces that, in light of the pronounced
uncertainties affecting the oil and gas industry, with the COVID-19
pandemic continuing to drive a significant falloff in global energy
consumption and deeply depressed oil prices, the Company has
engaged with its lenders to agree to interim measures for near-term
objectives.
The Company suspended its capital program in
response to the current economic environment and will restrict its
capital spending to a small suite of maintenance and required
decommissioning projects. Cash flows will be directed to ongoing
operations, with a focus on maintaining economic production. For
the last nine months of 2020, Prairie Provident has in place WTI
hedges covering over 80% of its 2020 forecast base oil production
(net of royalties) at an average floor price of US$52.25/bbl.
After payment of all operating, G&A and
other costs of conducting our business, the Company has agreed to
direct excess funds to repayment of borrowings on our senior
secured revolving note facility (“Revolving Facility”) and to not
make any requests for further advances under that facility. Prairie
Provident has also agreed to a 200 bps margin increase on
outstanding advances, bringing the total margin on the secured debt
to 700 bps.
Moreover, the holders of our outstanding
USD$28,500,000 original principal amount of 15% subordinated
unsecured notes due October 31, 2021, on which a portion of
quarterly interest payments are currently paid in cash with the
balance paid-in-kind and added to principal, have agreed to
payment-in-kind of all interest for the next payment date of April
30, 2020 and thereafter.
The Company continues to actively explore
opportunities to reduce debt, G&A expenses and operating costs,
with salary and compensation reductions implemented earlier this
month and other cost cutting measures under investigation.
Management is focused on operating efficiencies and balance sheet
improvements in response to industry circumstances and their
uncertain duration, and in consultation with our lenders and other
key stakeholders.
A lender redetermination of the Revolving
Facility borrowing base, originally scheduled for March 31, 2020,
has been temporarily deferred. The lenders are, however, entitled
to proceed with a redetermination at their discretion. The Company
is currently drawn approximately USD $57.0 million (based on an
exchange rate of USD $1.00 to CAD $1.39) against the USD $60
million borrowing base confirmed on the last October 2019
redetermination.
ABOUT PRAIRIE PROVIDENT:
Prairie Provident is a Calgary-based company
engaged in the exploration and development of oil and natural gas
properties in Alberta. The Company’s strategy is to grow
organically in combination with accretive acquisitions of
conventional oil prospects, which can be efficiently developed.
Prairie Provident’s operations are primarily focused at the
Michichi and Princess areas in Southern Alberta targeting the
Banff, the Ellerslie and the Lithic Glauconite formations, along
with an established and proven waterflood project at our Evi area
in the Peace River Arch. Prairie Provident protects its balance
sheet through an active hedging program and manages risk by
allocating capital to opportunities offering maximum shareholder
returns.
For further information, please contact:
Prairie Provident Resources Inc. Tim Granger President and Chief
Executive Officer Tel: (403) 292-8110 Email:
tgranger@ppr.ca
website: www.ppr.ca
FORWARD-LOOKING INFORMATION
This news release contains certain statements
("forward-looking statements") that constitute forward-looking
information within the meaning of applicable Canadian securities
laws. Forward-looking statements relate to future performance,
events or circumstances, and are based upon internal assumptions,
plans, intentions, expectations and beliefs. All statements other
than statements of current or historical fact constitute
forward-looking statements.
In particular, this news release contains
forward-looking statements pertaining to capital spending
restrictions, cash flow allocation, and debt repayment in future
periods. Such statements reflect material factors and expectations
and assumptions of Prairie Provident regarding, among other things:
its ability to generate positive cash flow despite the current
commodity price environment and excess supply conditions; continued
performance from existing wells, including production profile,
decline rate and product mix; and achievement and maintenance of
operating cost improvements.
Prairie Provident believes that the material
factors, expectations and assumptions reflected in the
forward-looking statements contained herein and upon which they are
based are reasonable in the circumstances based on currently
available information, but undue reliance should not be placed on
such information. Forward-looking statements are not guarantees of
future outcomes, and the Company can give no assurance that
forward-looking statements will prove to be correct or that the
factors, expectations and assumptions reflected therein or upon
which they are based will occur or be realized. Actual results will
differ, and the difference may be material and adverse to the
Company and its shareholders.
The forward-looking statements contained in this
news release are made as of the date hereof, and Prairie Provident
undertakes and assumes no obligation to publicly update or revise
any of them, whether as a result of new information, future events
or circumstances, or otherwise, except only as required by
applicable Canadian securities laws. All forward-looking statements
contained in this news release are expressly qualified by this
cautionary statement.
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