Triangle Petroleum Corp. (NYSE MKT: TPLM) subsidiary Triangle USA Petroleum Corp.'s (TUSA's) lenders recently completed their October semi-annual redetermination and the borrowing base under its senior credit facility was reaffirmed at $350 million. No terms of the credit facility were amended during this process.
Following this redetermination, Triangle had approximately $293 million of total liquidity (+2% QoQ) at the end of the third quarter of fiscal year (FY) 2016 (three-month period ended Oct. 31). This included $36 million of cash on hand and $161 million and $96 million of respective available borrowing capacity on the TUSA and RockPile Energy Services senior credit facilities.
Since July 31, TUSA and RockPile have reduced debt by $26 million (4%), largely as a direct result of the decision to defer drilling activities until next fiscal year. The debt reduction includes the repurchase and retirement of $10 million of face value of TUSA 6.75% senior notes for $5.8 million and a net reduction in the outstanding revolver balance of the combined TUSA and RockPile credit facilities of $16 million. There are currently $416 million of TUSA senior notes outstanding.
Triangle expects that TUSA and RockPile will continue to remain in full compliance with all financial covenants of their respective senior credit facilities when final third-quarter FY 2016 results are reported. As a reminder, each of the credit facilities is non-recourse to Triangle and there are no cross default provisions between Triangle and either subsidiary or between the two subsidiaries.
Preliminary production for third-quarter FY 2016 averaged approximately 13,590 boe/d, which brings average production volumes fiscal year to date through October to just over 13,600 boe/d. Triangle plans to complete two to six gross wells in the fourth quarter of FY 2016, which should support full-year production in the range of 13,200 boe/d to 13,600 boe/d.
Following the redetermination news, analysts at Wunderlich Securities Inc. commented: “Overall the numbers looked about as expected as TPLM continues to mitigate the downturn by reducing spending, maintaining liquidity, and focusing on getting through the down cycle. Given winter is coming and the Williston remains disadvantaged to other oil plays in the US, we remain Hold rated on TPLM but do feel it is making the right decisions as it hunkers down for winter and looks to maintain a solid balance sheet that can be utilized once things improve.”