Mr. Ingram B. Gillmore reports
GEAR ENERGY LTD. ANNOUNCES COMPLETION OF BORROWING BASE REDETERMINATION
Gear Energy Ltd. has completed its annual borrowing base redetermination and the syndicated credit facilities have been confirmed at $75-million with a maturity date of May 28, 2021. In addition, there are three repayment dates and corresponding reductions of the borrowing base scheduled for September 30, 2020, December 31, 2020, and March 31, 2021 of $5 million each. Adjustments have also been made to the interest rate pricing grid. The next borrowing base redetermination date has been set for August 31, 2020.
Gear has continued to be very proactive since the inception of the global pandemic, responding quickly to the unprecedented weakness in oil prices. Multiple cost reduction initiatives were implemented starting in early March with material reductions achieved in capital spending, compensation, and operating costs. Protecting the strength of the corporate balance sheet in this market has been and will remain the top priority for the company.
Through 2019, Gear was successful in reducing outstanding net debt by over 24 per cent while maintaining stable production levels. Despite the current weak oil prices, Gear is again forecasting a material reduction in outstanding net debt through the course of 2020. Utilizing existing operational guidance and current strip pricing, Gear estimates that the company will maintain ample liquidity under the new credit structure. The following table denotes the borrowing base levels for the remainder of 2020 and the forecasted amounts drawn under the syndicated credit facilities under various second half 2020 pricing assumptions using 2020 Annual Guidance as previously disclosed:
Date Borrowing Base ($MM)Forecasted Amounts Drawn Under the Syndicated Credit Facilities ($MM)
WTI US$35 WTI US$40 WTI US$45
July 10, 2020 75 66 66 66
September 30, 202070 59 58 58
December 31, 2020 65 54 52 50
WCS diff US$11.50/bbl, MSW/LSB diffs US$5.25, FX 0.74 $/$, AECO CAD$2.10/GJ, current guidance
We seek Safe Harbor.
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