Interoil CEO Michael Hession. Image courtesy of IIEA/Youtube.

Norway based independent Interoil is undertaking a strategic review that could prompt it to offload unspecified assets by the end of the year.

The company is facing mounting financial pressure that has already postponed a key exploration well in Colombia.

Colombian authorities are asking Interoil to pay a $10.5 million guarantee to maintain its rights to the LLA-47 licence, Upstream said.

Interoil had planned to spud its first exploration well at the license in December.

The Colombian government told Interoil earlier this month that the LLA-47 and Cor-6 licenses would be canceled if the company did not come up with bank guarantees cover its exploration costs at the two blocks.

Interoil, already strapped for cash, will delay its first well at LLA-47 until it can secure enough funds to ccover 100 percent of the collateral costs in cash.

Recoverable resources at LLA-47 are estimated at over 30 million barrels.

Interoil said its “experiencing increasing difficulties in obtaining necessary funding and financial guarantees from local banks to support operations” in Peru and Colombia.

The company needs long term financing to pay for its Colombian exploration projects and cash to sustain its output at the producing Puli C and Altair fields that are also in the country.

Interoil also has to repay a $3.6 million bank loan and a $7.5 million bank guarantee in the next few months.

The company has tapped Norway-based Arctic Securities to serve as a financial adviser and help conduct a review of strategic options.

The review is expected to be completed by the end of the year.

Interoil will present a preliminary plan to shareholders, bondholders and other stake holders in November.


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