CALGARY, June 8, 2016 /CNW/ – Northern Blizzard Resources Inc. (“Northern Blizzard” or “the Company”) (TSX: NBZ) announces a 46 (42.3 net) well drilling program and an amended credit facility.
Increased 2016 capital program
Northern Blizzard has increased its 2016 capital program to $55 million from $40 million, which includes the drilling of 46 (42.3 net) wells. The Company expects to drill the wells in the third quarter of 2016 with the drilling program focused on the Cactus Lake, Winter and Coleville areas.
The drilling program is expected to result in fourth quarter production of over 20,000 boe/d and a modest increase to annual 2016 production. Based on a WTI price of US$50/bbl for the remainder of the year, funds from operations are expected to increase by $15 million to $135 million.
Northern Blizzard operates and controls over 95% of its development program and has the ability to increase or decrease capital spending as circumstances dictate.
Amended credit facility
The semi-annual borrowing base review of Northern Blizzard’s credit facility has been completed. The credit facility, which is undrawn, was set at $300 million (previously $475 million) and provides the Company with significant liquidity. The revised facility will also result in reduced commitment and standby fees. The syndicate was reduced to nine banks (previously 13), allowing certain banks to take a more meaningful role in Northern Blizzard’s capital structure.
Borrowing rates and standby fees are based on a pricing grid that is dependent on Northern Blizzard’s debt to EBITDA ratio. There was no change to the pricing grid and the financial covenants remain unchanged. Northern Blizzard is in compliance with the financial covenants.
The revolving period under the credit facility was extended to July 14, 2017 and the maturity date to July 14, 2018. The revolving period is extendible annually by 364 days at the Company’s request, subject to the approval of each lender to extend its pro-rata borrowings outstanding. Any outstanding borrowings of non-extending lenders are converted to a one year term loan.
Northern Blizzard’s capital structure also includes US$276.3 million of senior unsecured notes. The senior unsecured notes are due in 2022 and have no financial maintenance covenants.
About Northern Blizzard
Northern Blizzard is a Calgary, Alberta based Canadian crude oil production and development company focused on maximizing oil recovery from its large-scale low viscosity heavy oil resource base. The Company’s operations, infrastructure and concentrated land position are focused in the Kerrobert and Lloydminster areas of Saskatchewan. Northern Blizzard’s common shares trade on the Toronto Stock Exchange under the symbol NBZ.