Phoenix Global provides funding update
London-listed Phoenix Global Resources said on March 9 it had extended its bridge financing facility with Mercuria to service its operations while it seeks a longer-term solution.
The Argentina-focused E&P firm is negotiating with Mercuria to agree a financial support package to service liabilities "as they fall" in the 12-month period which started September 14, 2021.
Mercuria continues to consider the restructuring of Phoenix's existing $332.2mn debt, but has agreed to further increase the bridging facility by $30mn to $97.5mn in the meantime. The non-convertible facility carries interest at the dollar LIBOR rate plus 4%.
Phoenix Global will use the increased headroom to fund its Argentina drilling work. With average oil and gas output of almost 5,000 barrels of oil equivalent (boe)/day, the company has been expanding its production activity in the northern Mata Mora exploitation licence and has allocated $110mn of capital expenditure to the area.
The company also extended its existing exploration rights for Correla Noreste and Sur blocks to April 2022, but later said two initial wells in the area flowed back high water content with traces of oil, and a high CO2 presence.
Argentina currently produces around 85% of its domestic gas consumption, or around 120mn m3/day of gas, but local Covid-19 restrictions heavily impacted E&P firms as demand for oil plummeted.
Phoenix's balance sheet wasn't very good in any case — the company had posted a $113.8mn operating loss for 2019 before the pandemic started. It followed that up by shedding $219.7mn in 2020, but seems to have turned a corner in the six months ending June 30, 2021, narrowing its loss to $16mn. Phoenix's cash position had by then deteriorated to $50mn, against total borrowing of $332.2mn, though the directors believe they can find a way back with a restructuring package.
To support Phoenix's restructuring efforts, Mercuria has already agreed to postpone repayments on the principal and interest of the facility until December 31, 2022. The interest payment grace period for a separate, convertible debt facility has been extended to September 30, 2022, with the first repayment falling on December 31, 2021.