Circle mulls funding options

Exploration firm Circle Oil has said it may explore a number of funding options to safeguard its financial stability in the current depressed oil price environment.

The company, which is active in northern Africa, yesterday posted an operating profit of almost €5.5m for the first half of 2015, down from €12.3m for the same period last year.

Circle incurred significant costs drilling offshore Tunisia and Oman which have materially impacted its cash resources.

However, Circle’s producing assets are generating good cashflow and the company has reached agreement to extend the terms and maturation of its current lending facilities.

In its interim results presentation yesterday the company said it continues to review its overall capital structure, so that it is “better positioned to take advantage of the opportunities it believes will arise in this lower oil price environment”.

“Like many exploration and production companies, the group’s overall financial position continues to be challenging,” said Circle’s chief executive, Mitch Flegg, who said management is evaluating the company’s capital structure to ensure it is appropriate for Circle’s operational objectives.

“This may still result in the group exploring potential funding options, including but not limited to financing opportunities or farm-outs.

"These actions are directed at ensuring that the group is able to remain profitable in a sustained lower oil price environment and better positioned to selectively pursue opportunities in its areas of focus,” he added.

Earlier this year, at Circle’s AGM, Mr Flegg said the company was hopeful of landing a farm-out/ development partner for its highly-rated Mahdia permit, off the coast of Tunisia, by the end of this year.

He told analysts yesterday that an extension to the permit to early 2018 gives Circle more time in which to find a partner, but that management is hopeful.

The Irish firm is looking for a partner to carry the costs of two drilling wells at the prospect.

Circle spent around €49m drilling at Mahdia last year and is unwilling to expose itself to such costs again.

However, it will keep some material interest in the asset, as Mahdia is seen as a potentially transformative find, with an estimated 100 million barrels of recoverable oil. That is significantly higher than Circle’s existing proven and probable reserves.

Circle has also reiterated its intentions to run the rule over acquisition opportunities elsewhere in northern Africa.


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