XCITE Energy has parted company with three directors under a cost saving drive as the company tries to keep alive its plan to develop the giant Bentley heavy oil field East of Shetland amid the crude price plunge.
The Aim-listed company said Gregory Moroney, Scott Cochlan and Henry Wilson had resigned as non-executive directors as part of the overhead review exercise it is undertaking.
Long serving chief operating officer Stephen Kew has resigned from that position but will remain on the board as the sole non-executive director.
The resignations look likely to save Xcite around £400,000 a year.
The company, which has an office in Aberdeen, announced the departures the day after it won a three month extension to the deadline for the repayment of $135 million (£100m) bonds, to 30 September.
Chief executive Rupert Cole and chief financial officer Andrew Fairclough remain in place, along with chairman Timothy Jones.
Mr Jones said the departing directors had been keen advocates of the company and their experience and advice would be missed.
However, the sharp fall in the oil price since June 2014 has left Xcite facing significant challenges.
In May Xcite noted the existence of a material uncertainty in relation to the group’s ability to continue as a going concern.
It said this was dependent on the group’s ability to repay or renegotiate the key terms of the bonds, which were then due for settlement on 30 June.
The company secured the funding in June 2014, in a move that Mr Cole said would give it the flexibility to work with partners to finalise a plan to develop the Bentley field.
Xcite calls Bentley one of the largest undeveloped fields in the North Sea.
Last year the company increased its estimate of the size of the find to 267 million stock tank barrels, following a report by experts. It said a field of that size could be worth $2.5bn, even following the fall in the oil price.
However, the company wants to find a partner to help cover the hefty costs of developing such a field. This is unlikely to be an easy task in the current low oil price environment, in which risk aversion is the order of the day.
In the company’s annual report for 2015, Mr Jones said: “The poor sentiment and reduced capital available to the industry have both had a significant adverse impact in the short term for those companies seeking development funding.”
After raising bond funding shortly before a long oil price boom ended, Xcite finds itself negotiating with the bond holders under very different conditions.
The oil price fall has made it harder for exploration firms to raise fresh debt funding that they could use to repay existing borrowings.
Xcite is seeking approval from bondholders for a plan that would involve a debt for equity swap.
Yesterday Premier Oil said discussions with its lending group on the terms of its existing facilities are progressing well.
Lenders have agreed the covenant test scheduled for 30 June will be waived and replaced by a test for the 12 month period ending 31 July.
Premier started production from the bumper Solan field off Shetland in April.
The following month it said a relaxation of the main financial covenants may be required in respect of the testing periods ending 30 June and 31 December, citing the impact of weak oil prices.
North Sea focused Enquest, which has been trying to cut debts, said yesterday that it had made good progress offshore Scotland in recent months.
A well on the Eagle prospect confirmed a discovery. Drilling of the development wells on the Scolty and Crathes fields was completed ahead of schedule and under budget and resulted in a small reserves upgrade.
The company said the successes demonstrated its ability to create value from maturing assets and from exploration work.
In May EnQuest said it was in talks with lenders about potential assets sales and further cost cutting as it looked to reduce debts.
The departing Xcite non-executive directors earned £45,000 fees each last year. Mr Kew had $411,000 total remuneration.
Mr Cole and Mr Fairclough earned $453,000 and $295,000 respectively.
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