Silhouette of oil pump jackhanhanpeggy/Getty Images/iStockphoto
Twin Butte Energy Ltd. has warned it is days away from lenders calling in its loans and making the oil and gas producer the next victim of the industry downturn.
Twin Butte, which had tried for six months to seek a buyer, said late Tuesday that its bankers had refused to grant any more extensions to credit facilities that total $225-million. They are due on Friday.
Unless there's an 11th-hour change of heart, the lenders can enforce their loans then and demand a receiver be appointed.
The company joins a growing list of energy producers whose balance sheets were unable to withstand the lengthy trough in oil and gas prices. On Tuesday, smaller LGX Oil + Gas Inc. went into receivership, a week after its lenders refused to extend a $31-million credit facility.
LGX had said its fortunes were further limited by a federal order protecting habitat for the endangered Greater Sage-Grouse on lands where much of the company's operations are.
It likely comes too late for some of the long-struggling producers such as Twin Butte, but U.S. oil prices have staged a major recovery in recent months, topping $51 (U.S.) a barrel on Wednesday, its highest since July.
In December. Twin Butte hired Peters & Co. Ltd. and National Bank Financial Inc. to help it weigh options, including a debt restructuring and alternative financing, as well as a sale of the company.
Analysts have said the acquisition market has been tempered by stubborn differences of opinion between asset sellers and would-be buyers, largely based on uncertainty over commodity prices.
However, the deal flow has not stopped. Last week, Raging River Exploration Ltd. announced a $52-million all-share takeover of Rock Energy Inc. On Tuesday, Gear Energy Ltd. said it agreed to buy Striker Exploration Corp. for about $57-million.
Jeffrey Jones