Iona Energy asks bondholders to extend terms

Industry news

North Sea explorer Iona Energy has asked its bondholders to extend terms on its debt by about £90million until it can reach first oil on its Orlando field later this year or at the start of 2016.

Last year, the Toronto and Aberdeen-based firm raised £185million from lenders.

But it has been hit by a double whammy of both falling oil prices and production problems at its main North Sea field in production, Huntington.

The company has seen its share value almost wiped out to nil on the Toronto stock exchange in recent weeks, but today made some gains as shares doubled in value – to 0.2 cents.

Following a conference call with investors and analysts in Toronto, the company confirmed that 40% of bondholders have agreed to extend the terms of the debt.

Chief executive Tom Reynolds said he was “quietly confident” the remaining lenders would back the plan.

Bondholders will meet on March 27 to vote on whether they will support the measures.

The firm had previously warned it was likely breach its bond terms a shut-in at Huntington since October.

Mr Reynolds said the field was due to come back online through the BP-operated Central Area Transmission System (Cats) later this month.

North Sea veterans Iain McKendrick, the former chief executive of Ithaca Energy and Mr Reynolds, the former boss of Bridge Energy, were drafted in last year to become chairman and chief executive, respectively, of Iona last year.

Mr Reynolds said: “We are working on a solution that will demonstrate we have the support to finish Orlando.

“With the release today we have demonstrated we have that support. It was good news for both our employees and the supplier groups we are working with on the project.”

Orlando, which is operated by Premier Oil (40% interest), Noreco (20%), E.on (25%) and Iona Energy (15%), has the potential to produce around 40,000 barrels of oil a day but has been hit by a series of production delays.