CALGARY, ALBERTA–(Marketwired – June 15, 2016) – Delphi Energy Corp. (TSX:DEE) (“Delphi” or the “Company”) is pleased to report that it has closed its previously announced upsized public offering of 60,000 units, each consisting of $1,000 principal amount 10% Collateralized Exchange Listed Notes™ (the “CEL Notes”™) and 245 common share purchase warrants, for aggregate gross proceeds of $60.0 million (the “Offering”). The Offering was underwritten by Raymond James Ltd. and Peters & Co. Limited, as joint lead bookrunners, AltaCorp Capital Inc., GMP Securities L.P. and Industrial Alliance Securities Inc. (collectively, the “Underwriters”).
The Company used a portion of the net proceeds of the Offering to permanently repay the full amount of indebtedness under its subordinated third party credit facility of approximately $14.2 million and used the balance of the net proceeds to repay a portion of indebtedness under its senior credit facility.
As part of the Company’s overall financial strategy to target a more reliable and predictable debt capital structure, term debt will form a core piece of the Company’s capital structure going forward. Total debt capacity of $145.0 million, consisting of the $60.0 million five year CEL Notes and an $85.0 million senior credit facility with a syndicate of Canadian banks is supported in the current pricing environment by the Company’s liquids-rich Montney asset base, consistent operational and financial results and a proven hedging strategy.
Consistent with its 2016 guidance, Delphi plans on maintaining the liquidity it has created through the Offering and forecasts that approximately 20 to 25 percent of the senior credit facility will remain undrawn through 2016. Delphi’s capital spending plans through the remainder of 2016 are expected to remain within funds from operations, supported by a significant hedge position and increasing cash netbacks. Netbacks, before hedges, are expected to continue to increase as a result of higher revenues from increased condensate yields and improving commodity prices, declining operating and transportation costs, and lower royalties on new wells as a result of the discontinuation of the Company’s GORR funding program. Incremental interest costs associated with this more balanced debt structure impact the cash netback by approximately $0.70 per boe annually. The Company will continue to pursue non-core dispositions and other strategic joint venture opportunities to further enhance its growth efforts within its large Bigstone Montney core asset, while providing further financial flexibility.
The Company has managed its capital structure over the past four years without the issuance of equity and has reduced its total debt by 30 percent over the past 12 months through a successful disposition program of non-core assets. Based on the first quarter of 2016 funds from operations of $8.2 million or $10.72 per barrels of oil equivalent (“boe”), the senior debt to annualized funds from operations ratio improves to 2:1, while the total debt to annualized funds from operations ratio remains unchanged.
This news release does not constitute an offer to sell or a solicitation of any offer to buy the securities in the United States. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended and will not be offered or sold in the United States absent an exemption from the registration requirements thereof.
Delphi Energy is a Calgary-based company that explores, develops and produces oil and natural gas in Western Canada. The Company is managed by a proven technical team. Delphi trades on the Toronto Stock Exchange under the symbol DEE.