Do You Know Why Elk Petroleum Shares Are Dipping Low?

Elk Petroleum shares rushed to hit the lowest levels after the company announced a comprehensive refinancing package into place. The news affected the stock to such extent that the price fell straight by 12% or $0.006 to stand at $0.044 on 14 January 2019 (2:06 PM AEST).

In today’s announcement to Australian Securities Exchange, Elk Petroleum Limited (ASX: ELK) stated that it had reached an agreement with AB Energy Opportunities Group, a unit of AllianceBernstein for comprehensive refinancing package.

The company further noted that this refinancing package would strengthen the overall liquidity of the company while bringing down the company’s financing expenses in the calendar year 2019 and beyond. However, the agreement is subject to definitive documentation which is currently into the process of negotiation between Elk Petroleum and AB EOG.

Both the parties intend to affect a comprehensive restructuring of the Aneth Term Loan through this refinancing package led by AB EOG. They are also planning the existing preferred equity holdings to be completed by the end of January. Further, as part of the refinancing package, the company plans to secure a lower cost conventional reserve-based credit facility which will replace the current facility. The parties are targeting having this completed by the end of the first quarter of 2019.

In parallel with this refinancing package, the Company plans to implement an overall US Corporate and Aneth operating cost reduction program to improve the overall profitability of the Aneth Oil Field operations and free cash flow generation. Elk Petroleum has reportedly engaged Ankura Consulting Group as the Company’s operations restructuring advisor to achieve its objective of overall cost reduction and financial restructuring of Aneth. It also includes the appointment of Mr. Scott Pinsonnault as the Company’s Chief Restructuring Officer.

Furthermore, the company intends to provide a comprehensive update on the detailed terms of the refinancing package once the definitive documentation is agreed.

Elk Petroleum Limited is an ASX-listed oil and gas company. It specializes in the development of enhanced oil recovery with projects situated in the coastal oil region of the United States of America, the Rock Mountain.

On the financial front, the company posted strong operating performance with total revenue of US$95.1 million for the fiscal year ended 30 June 2018. It reflects as giant as 1,825% improvement on US$4.9 million revenue in FY17. A key contributing factor to Group’s revenue generation includes the positive impact of Aneth oil project acquisition completed during the Year. Moreover, itsFY18 adjusted net profit was US$1.4 million, reflecting a statutory Gross Profit of US$29.9 million and adjusted Gross Profit of US$39.2 million, adjusted EBITDAX of US$13.5 million

Over the past 12 months, ELK stock price has witnessed a negative performance of 33.33% with downturn softening since the past three months.


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