CALGARY, AB, July 10, 2020 /CNW/ - Gear Energy Ltd.
("Gear") (TSX: GXE) 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,
2020
|
70
|
59
|
58
|
58
|
December 31,
2020
|
65
|
54
|
52
|
50
|
Key assumptions
WCS diff US$11.50/bbl, MSW/LSB diffs US$5.25, FX 0.74 $/$, AECO CAD$2.10/GJ, current guidance
Forward-looking Information and Statements
This press release contains certain forward-looking information
and statements within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "continue",
"estimate", "objective", "ongoing", "may", "will", "project",
"should", "believe", "plans", "intends", "strategy" and similar
expressions are intended to identify forward-looking information or
statements. In particular, but without limiting the foregoing, this
press release contains forward-looking information and statements
pertaining to the following: Gear's intent to continue to protect
the strength of the corporate balance sheet; Gear forecast of a
material reduction in outstanding net debt through the course of
2020; Gear's estimate that the Company will maintain ample
liquidity under the new credit structure; and Gear's estimate of
the borrowing base amounts and amounts drawn on its credit
facilities at various dates based on various assumptions.
The forward-looking information and statements contained in this
press release reflect several material factors and expectations and
assumptions of Gear including, without limitation: various
assumptions relating to Gear's guidance for 2020 as set out in
Gear's press release dated June 30,
2020; that Gear will continue to conduct its operations in a
manner consistent with past operations; the general continuance of
current industry conditions; the continuance of existing (and in
certain circumstances, the implementation of proposed) tax, royalty
and regulatory regimes; the accuracy of the estimates of Gear's
reserves and resource volumes; certain commodity price and other
cost assumptions; and the continued availability of adequate debt
and equity financing and funds from operations to fund its planned
expenditures. Gear believes the material factors, expectations and
assumptions reflected in the forward-looking information and
statements are reasonable but no assurance can be given that these
factors, expectations and assumptions will prove to be correct.
To the extent that any forward-looking information contained
herein may be considered a financial outlook, such information has
been included to provide readers with an understanding of
management's assumptions used for budgeting and developing future
plans and readers are cautioned that the information may not be
appropriate for other purposes. The forward-looking information and
statements included in this press release are not guarantees of
future performance and should not be unduly relied upon. Such
information and statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking information or statements including, without
limitation: actions taken by Gear's lenders to significantly reduce
Gear's access to credit or require repayment of outstanding
amounts; changes in commodity prices; changes in the demand for or
supply of Gear's products; unanticipated operating results or
production declines; changes in tax or environmental laws, royalty
rates or other regulatory matters; changes in development plans of
Gear or by third party operators of Gear's properties, increased
debt levels or debt service requirements; inaccurate estimation of
Gear's oil and gas reserve and resource volumes; limited,
unfavorable or a lack of access to capital markets; increased
costs; a lack of adequate insurance coverage; the impact of
competitors; and certain other risks detailed from time to time in
Gear's public documents including in Gear's most current annual
information form which is available on SEDAR at www.sedar.com. The
forward-looking information and statements contained in this press
release speak only as of the date of this press release, and Gear
does not assume any obligation to publicly update or revise them to
reflect new events or circumstances, except as may be required
pursuant to applicable laws.
SOURCE Gear Energy Ltd.