Circle Oil shares suspended as full-year revenues fall 54%

Shares in Cork-based explorer Circle Oil, which on Wednesday announced a 54 per cent decline in full-year revenues, have been suspended as the company seeks to be discharged from its financial obligations.

The company, which is quoted on the Alternative Investment Market (AIM) in London, said in its annual results that it is looking to renegotiate its existing funding arrangements or obtain additional funding.

Earlier this year Circle announced a strategic review to put in place a sustainable long-term financing structure for the company.

It said on Wednesday that taking into account the company’s debt position and based on the current status of proposals received from its principal debt providers, Circle did not believe there would be any value attributed to equity holders.

The North Africa and Middle East-focused explorer said it had asked for its shares to be suspended with immediate effect on the grounds of financial uncertainty.

"The group has a significant short-term obligation of $57.5 million payable in full in the event of default under the terms of the reserves based lending facility signed with IFC and may be required to repay the convertible loan liability of $20 million," said chairman Stephen Jenkins.

He said the company’s financial position “remains significant pressure given the unpredictable and infrequent payments from Egyptian General Petroleum Corporation (EGPC)”.

Earlier on Wednesday, Circle published its 2015 results, which show full-year revenues of $38.95 million, compared to €84.62 million a year earlier. The company attributed the decline in turnover to lower oil prices and a fall in production levels.

There was an operating loss of $112.65 million compared to $48.02 million in 2014. This was caused primarily by impairment of Sebou permit in Morocco and NW Gemsa permit in Egypt totalling $67.67 million along with $40.89 million in write-offs of exploration expenditure in Tunisia.

Group operating loss, before write-offs and impairments was $3.84 million. Circle incurred write-offs and impairments of $108.82 million, compared to US$71.33 million a year earlier.

Capital expenditure fell from $103 million to $28.43 million with cash generated from operations falling to $26.81 million, versus $56.26 million for the preceding year.

Shares in Circle closed up 9 per cent in London on Tuesday to 0.62 pence.