Investors have been worried about whether holders of PetroBakken’s convertible debentures, set to mature in 2016, will take advantage of an early put option coming up in February, 2013, and demand a payment of cash or shares.
“Current economic conditions and market rumours have caused shareholder focus to be turned away from the high quality, light oil assets that underpin the company, to the perceived strength of our balance sheet in light of the convertible debenture put date (that is 16 months away) and our current capital and dividend plans,” PetroBakken said in a statement.
Shares in the oil producer gained 4.4 per cent to $7.05 in afternoon trading Monday on the Toronto Stock Exchange, recovering some of the losses the stock suffered last week. Last Thursday alone, PetroBakken sank 22 per cent on concerns about its debt.
PetroBakken has hired TD Securities to advise it on ways to boost liquidity.
Increased oil and gas production should help cash flow over time, PetroBakken said. But it’s weighing other options such as cuts to its capital spending and monthly 8 cent dividend. As well, it’s looking at issuing new debt, a dividend reinvestment program, renegotiating the terms of its existing convertible debentures and asset sales.
The Calgary-based company said at the end of September it had drawn $1.14-billion on its $1.35-billion credit facility. That leaves $210-million for PetroBakken to work with – more than the $75-million Desjardins analyst Allan Stepa had been expecting.
“Although we believe that measures to strengthen the balance sheet are positive for the company in the long term, concerns about a potential dividend cut could serve as a headwind for the stock,” he said.
“However, we believe the possibility of a dividend cut has already been factored into the current stock price, which is trading at a significant discount to its peer group.”
Also Monday, PetroBakken said it produced 43,000 barrels of oil equivalent per day at the end of September, a 22 per cent increase over the previous quarter. The company drilled about 70 net wells, a decrease of five over last year.
About 3,000 barrels of daily production remain shut in because of maintenance work and problems accessing the properties due to floods.
Source: The Globe & Mail