Angus Energy strengthens balance sheet as pays down outstanding debt
(Alliance News) - Angus Energy PLC on Monday said it has used surplus operational cash flow to pay down outstanding debt, "materially" strengthening its balance sheet.
In response, shares in the UK-focused onshore oil and gas developer advanced 7.1% to 0.20 pence each in London on Monday.
The company said completion of the first cash sweep has enabled it to repay the GBP2.0 million overriding royalty interest in full, eliminating this liability entirely, while also making a similar-sized prepayment against the Trafigura senior debt facility.
As a result, the outstanding Trafigura facility has been reduced to around GBP22.7 million.
Angus Energy said the repayment of the ORRI cash amount represents an "important" milestone.
ORRI is a non-working interest that gives the holder a percentage of gross oil and gas production revenue from a specific lease, free of any operational or development costs. While cash sweep is a financing activity whereby a set percentage of surplus operational cash flow is automatically taken and used to pay off company debt.
Angus Energy said that under new financial arrangements, all future cash sweep proceeds will now be directed exclusively towards reducing the outstanding Trafigura facility, accelerating the company's deleveraging profile.
"Every pound of debt we repay reduces future financing obligations and increases the value attributable to shareholders," said Finance Director Carlos Fernandes.
In June, the company struck a restructuring deal with all key creditor groups, including Trafigura, the Royalty Holders, and Forum Energy Services Ltd. Since then, Angus Energy said it repaid a total of GBP5.2 million of debt principal, "materially" strengthening the balance sheet.
"This rapid reduction in indebtedness demonstrates the company's ability to generate cash while executing its strategy of accelerating deleveraging and continuing to invest in future growth," it said.
By Jeremy Cutler, Alliance News reporter
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