Norwegian independent Interoil is speeding up its refinancing plans as its faces “increasing difficulties” funding its operations and securing bank guarantees for two onshore Colombia blocks.
In October, Colombia’s National Agency of Hydrocarbons (ANH) threatened to terminate Interoil’s Cor-6 and LLA-47 licenses and impose financial penalties if the company could not secure required bank guarantees by the end of 2014.
Interoil said its financial woes will make it “impossible” to conduct exploration and production activities in Cor-6 and argued it should not have to post the $16 million bank guarantees for the license.
The company is working to find guarantees for LLA-47 but has not been able to secure the financial intruments.
“Interoil will continue to work closely with the ANH in order to find a solution that is acceptable to both parties,” the company said.
The company previously postponed new investments at the Puli-C field and delayed drilling the first well in LLA-47, initially slated to start in December 2014.
The bank guarantee issue is compounding an already “challenging financial situation” that is slowing down the Interoil’s refinancing plans.
The company’s board is trying to “accelerate” refinancing preparations as the funding crunch “significantly impacts” activities.
Interoil hoped to present refinancing plans in November but pushed the window back to December.
Drops in production and slumping oil prices brought the company’s third quarter profits down to $4.7 million from $6.9 million last year.
The company posted a comprehensive net income of $900,000 during the third quarter.