Pacific Exploration & Production Corp. (TSX: PRE) (BVC: PREC) announced today that the company and its lenders have agreed to extend the Liquidity Deadline to February 4, 2016, “or such later date as the company and its lenders shall agree.” This comes after the oil company missed interest payments that came due January 19.
Pacific Exploration & Production, formerly known as Pacific Rubiales, also announced today the formation of an independent committee of the board of directors to assist the full board of directors in analyzing strategic alternatives to its capital structure in this low oil price environment. The Canadian petroleum company announced today in a statement that “The company and its board of directors are committed to working with all of the company’s stakeholders, including its contracting parties in Colombia and abroad, to ensure the long-term viability of the company and the preservation of value.” The company is being advised by Lazard Frères & Co. LLC.
Pacific Exploration announced on December 28 of last year that it obtained certain waivers with respect to the: $1 billion USD revolving credit and guaranty agreement with a syndicate of lenders and Bank of America as administrative agent; the $250 million credit and guaranty agreement with HSBC Bank USA, as agent; the $109 million credit and guaranty agreement with Bank of America as lender; and the $75 million master credit agreement with Banco Latino Americano de Comercio Exterior (Bladex) as lender.
The waivers obtained by Pacific Exploration provide relief in respect of the covenant that requires its consolidated net worth to be above U.S.$1 billion and in respect of the company’s consolidated leverage ratio of 4:50:1:00, which reflects the permitted gross debt-to-trailing twelve month adjusted EBITDA. The waivers are set to expire on February 26, 2016 and are subject to the satisfaction of certain terms and conditions, including a condition that the company and the requisite threshold of the company’s lenders reaching an agreement on or before January 21, 2016 with respect to a covenant providing for the minimum amount of unrestricted cash to be retained by the company throughout the waiver period. The previous extension of the liquidity deadline was granted on January 14, 2016 through to January 21, 2016.
Pacific Exploration is involved in exploration and production of natural gas and crude oil, with operations focused in Latin America. The company has a portfolio of assets with interests in more than 85 exploration and production blocks in seven countries including Colombia, Peru, Guatemala, Brasil, Guyana, Papua New Guinea, Mexico and Belize.