To date, the Company has reduced total debt by approximately US$198 million (31%) and annual interest expense by approximately US$9.5 million (debt exchanges and conversions only) since the end of the second quarter through the following transactions:
In September the Company exchanged US$55 million of (old) 2032 convertible notes into US$27.5 million of (new) 2032 convertible notes resulting in US$27.5 million of net debt reduction
In September the Company closed on the sale of its Eagle Ford Shale production, proved reserves and associated acreage which allowed for a reduction in net debt through the third quarter of approximately US$72.5 million. Approximately US$14 million of sales proceeds is still held in escrow pending a post-closing settlement;
In October the Company exchanged US$158.2 million of 2019 senior notes into US$75 million of second lien notes resulting in US$83.2 million of net debt reduction. The Company expects to book an estimated gain of US$62.6 million in the fourth quarter for the debt exchange;
In October the Company exchanged US$17.1 million of (old) 2032 convertible notes into US$8.5 million of (new) 2032 convertible notes resulting in US$8.6 million of net debt reduction;
In September and October the Company reduced total debt by an additional US$6.2 million through conversion of (new) 2032 convertible notes into common stock.
The Company remains focused on transactions that will reduce debt and interest expense.
The borrowing base under the Company's senior credit facility was reaffirmed at $75 million and covenants amended to provide for flexibility through February 2017.
Third quarter highlights:
Capital expenditures for the quarter totaled $16.4 million. Full year capital expenditures expected to be lower by 10-15% versus previous guidance;
Production for the quarter totaled 645,000 boe (50% oil), which was affected by deferred completions and the sale of the Company's Eagle Ford production, proved reserves and associated acreage;
Adjusted Revenues, which includes the benefit of realised gains on the Company's oil hedges, were US$31.5 million for the quarter versus US$55.1 million in the prior year period;
Operating Expenses were lower by US$114.5 million in the quarter versus the prior year period primarily due to a decrease in the amount of impairment expense recognised of US$52.9 million and a US$42.8 million gain recognised on the sale of the Company's producing interest and associated acreage in the Eagle Ford Shale. Sequentially Operating Expenses were lower by US$9.2 million;
(Adjusted EBITDAX) defined as earnings before interest, taxes, non-cash general & administrative (G&A) expenses and exploration was US$20.3 million in the quarter, compared to US$37.1 million in the prior year period.
Petrobras has announced that it has identified the presence of high-quality oil with no contaminants in the pre-salt of Santos Basin, in an exploratory well in Aram block.
