CALGARY, Alberta – Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) is pleased to announce the concurrent extension of its second lien term loan (“Term Loan”) and Revolving Credit Facility (“RCF”) and the completion of the RCF lenders’ 2020 annual review. The Company’s board of directors has also approved its third quarter 2020 capital budget.
SECOND LIEN TERM LOAN EXTENSION
Petrus has entered into an amending agreement with Macquarie Bank Limited to extend the $35 million Term Loan maturity date to July 31, 2021. The interest rate on the Term Loan balance will be updated to become the Canadian Dealer Offered Rate (“CDOR”) plus 975 basis points. All of the interest will be made by way of payment-in-kind (“PIK”) and added to the outstanding balance of the Term Loan in lieu of monthly payment of cash interest. The Term Loan extension also includes the removal of the Total Debt to EBITDA ratio as well as the Proved and PDP Asset Coverage Ratios from the financial covenants. The Working Capital ratio covenant has been updated to a minimum test of 0.6:1.0 (or such lower amount as agreed to by the lenders under the Term Loan which shall not be less than 0.5:1.0).
CREDIT FACILITY EXTENSION
Concurrent with the Term Loan extension, the Company has also completed its annual RCF review. The RCF was updated to $88.5 million. At the end of the second quarter of 2020, the Company was drawn approximately $86.7 million against the RCF, inclusive of a $0.6 million letter of credit outstanding. The RCF will be reduced by $2.75 million at the end of each fiscal quarter. The Company’s RCF maturity date has been updated to May 31, 2021 which was set prior to the Term Loan maturity of July 31, 2021. Similar to the Term Loan extension, the RCF includes the removal of the Total Debt to Adjusted EBITDA ratio as well as the Proved and PDP Asset Coverage Ratios from the financial covenants, and the Working Capital ratio covenant has been updated to a minimum test of 0.6:1.0 (or such lower amount as agreed to by the lenders under the RCF which shall not be less than 0.5:1.0). As part of the RCF extension the Bankers Acceptance Stamping fees will range between 350 bps and 600 bps which will result in an increase in the RCF interest rate of between 150 bps and 250 bps. The increase in interest rate charged will be partially offset by the continued and systematic reduction in the Company’s net debt each quarter.
Petrus management believes it has adequate liquidity to execute the Company’s business plan over the coming year. The Company continues its efforts to divest certain non-core assets and evaluate other sources of capital to improve its balance sheet.
2020 THIRD QUARTER CAPITAL BUDGET
With the current volatility in the price of Canadian light oil and natural gas, the Company believes that it is prudent to maintain a disciplined capital budget that is flexible from an operational and financial perspective. Petrus’ board of directors has approved a third quarter 2020 capital budget of $0.7 million for predominantly non-discretionary capital. No drilling or completion activities are expected to take place in the third quarter.
Petrus is committed to maintaining its financial flexibility and the Company intends to determine subsequent quarter capital spending as the year progresses. For the second half of 2020 we believe we have significant optionality in the number, the commodity composition and the location of drilling opportunities. Petrus is focused on designing its 2020 capital plan to invest capital systematically each quarter within funds flow, permitting excess funds each quarter to reduce debt.
Petrus is a public Canadian oil and gas company focused on property exploitation, strategic acquisitions and risk-managed exploration in Alberta.