Full-year financial results for Caza Oil & Gas (CAZA) show the US-based company reduced gearing in 2014, largely aided by the $10m (£5.9m) share placing announced last July. But look further into the statement and the debt position is far from positive, as the company notes it is "not in compliance with all financial covenants".
Apollo Investment Corporation, which loaned Caza $45m, has agreed to defer the covenant breach until September, although the note is now booked as a weighty current liability on the oil company's balance sheet. Caza acknowledges that continued breach of these covenants - likely, given a reduction in capital expenditure - could cut off its access to additional funding.
Although Caza has hedged 80 per cent of this year's production, the fall in crude prices has compounded uncertainty on the financing front. The company is now focused on ramping up production at its cash-generative Bone Spring play in southeast New Mexico, where it drilled 15 wells in the course of the year. To do this, Caza needs additional financing "and may consider other strategic options", as well as an improvement in the prevailing crude oil price. A 173 per cent increase in production in 2014 is encouraging, but this has come amid a fall in cash and cash equivalents from $18.5m to $5.2m.
House broker Cenkos does not currently publish earnings forecasts due to Caza's fast-changing production profile.
| CAZA OIL & GAS (CAZA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4.4p | MARKET VALUE: | £10m | |
| TOUCH: | 4.25-4.5p | 12-MONTH HIGH: | 26.4p | LOW: 4.25p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 13¢ | NET DEBT: | 117% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 2.2 | -7.5 | -6 | nil |
| 2011 | 4.1 | -23.3 | -14 | nil |
| 2012 | 5.0 | -12.2 | -6 | nil |
| 2013 | 8.3 | -8.6 | -5 | nil |
| 2014 | 22.9 | -7.1 | -3 | nil |
| % change | +176 | - | - | - |
Ex-div: na Payment: na | ||||
