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Delphi Energy First Quarter 2020 Results

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   |    Friday,May 08,2020

Delphi Energy Corp. has reported its Q1 operational and financial update.

Q1 Financial Update

Delphi announces that it has obtained an order from the Court of Queen’s Bench of Alberta granted in Delphi’s proceedings under the Companies’ Creditors Arrangement Act extending the stay period provided by the amended and restated initial order to May 22, 2020.

Delphi reports that Luminus Energy IE Designated Activity Company, an affiliate of a pooled investment vehicle of Luminus Management, LLC, has purchased and taken an assignment of all of the rights of Delphi’s first lien senior secured lenders, ATB Financial (as administrative agent), Bank of Montreal and The Bank of Nova Scotia, under Delphi’s credit facilities. Luminus is a related party of Delphi which, through one or more of its pooled investment vehicles or affiliates thereof, holds 14,065,138 common shares, representing approximately 57% of Delphi’s outstanding common shares, and approximately $58.7 million principal amount of Delphi’s second lien senior secured notes, representing approximately 49% of the outstanding second lien senior secured notes.

On April 24, 2020, Delphi received notice of the Senior Lenders’ intent to exercise their right to terminate the commodity swap contracts held by the Company, in aggregate totaling $17.19 million. The proceeds were used to reduce the $31.8 million owed to the Senior Lenders.

“We view this as a very positive step forward in pursuit of an acceptable and timely solution for the remaining stakeholders, given the stated objective of certain members of the Senior Lending Syndicate to terminate the relationship with the Company”, said David Reid, President and Chief Executive Officer of the Company. “We now look forward to accelerating the process”.

The extension of the stay period to May 22, 2020 is expected to allow for interim financing for the Company to be negotiated and finalized, for a claims process to be prepared, and for the Company, in consultation with Luminus and the monitor in the CCAA proceedings, to continue its restructuring efforts. As part of this process, the Company plans to pursue programs recently announced by the Federal and Provincial Governments in conjunction with the Business Development Canada and Export Development Canada to expand credit support for at-risk small and medium-sized energy companies.

The Company also intends to pursue well abandonment funding from the Federal and Provincial Government programs, to continue to reduce its well abandonment obligations. Delphi has actively managed its abandonment obligations with an ARO of approximately $23.55 million as at March 31, 2020 and continues to have one of the strongest LLR ratings in industry at 9.91.

Operations Update

Delphi continues to be impressed with the results of the three new wells drilled and completed in the first quarter of 2020. The 03-30-59-23 W5M (“03-30”) has achieved a first 30 day production rate (“IP30”) of 1.9 million cubic feet per day (“mmcf/d”) of sales gas, and 1,010 barrels per day (“bbl/d”) of field condensate, for a total production rate of approximately 1,410 barrels of oil equivalent per day (“boe/d”) including natural gas liquids (“NGL”). The second well has produced intermittently to restrict corporate production during this period of low oil prices. Over 18 days, the 13-12-60-24 W5M (“13-12”) well has averaged 2.9 mmcf/d of sales gas and 1,400 bbl/d of field condensate for a total production rate of approximately 2,000 boe/d, including NGLs. The third well at 14-12-60-24 W5M (“14-12”) remains shut-in. Given the current low oil prices and the termination of the hedging contracts by the Senior Lenders, the Company will continue to restrict production to fulfill only short term contractual delivery obligations. During the month of April, corporate production averaged approximately 7,100 boe/d (49 percent field condensate and NGLs).