BW Offshore has drawn up a plan that it expects to improve its liquidity by more than $500m by 2020.
The plan comprises an big equity injection, amortisation reliefs and maturity extensions for both its bank loan facilities and bonds, which BW Offshore hopes will give it a firm financial platform until crude prices recover.
Some $100m will be raised in new equity capital, for which BW Offshore says it is considering a fully underwritten rights issue, subject to approval from the company’s board and shareholders at special general meeting on June 15.
Parent company BW Group and Carl Krogh Arnet, BW Offshore’s CEO, have said they will subscribe for their pro-rata share of the rights issue. The remaining shares to be issued will be underwritten by a syndicate of banks, the company said.
BW Offshore hopes the plan will reduce its total debt and capital expenditure commitments by $1.3bn between 2016 and 2020, when it aims to have reduced its total debt to around $1bn.
“The oil price has recovered from the 12-year low point in January 2016. Uncertainty about future oil prices continues to drive cost-cutting and reduction in E&P [exploration and production] spending,” the company said in a release today.
“BW Offshore still expects outsourcing of production to be a cost-effective solution for oil and gas companies, but still believes it is prudent to expect a prolonged downturn in contract awards.”
The company reduced the number of its onshore staff by 35% during the first quarter, which is expected to reduce its annual cost base by $30m.
BW Offshore said it was in compliance with all its financial covenants at the end of the first quarter 2016.