CALGARY — Gas-weighted producer Compton Petroleum Corp. said Thursday it has a deal to sell assets for $17 million that will allow it to repay part of the $30 million it has overdrawn on its line of credit.
The Calgary producer has been struggling to right its balance sheet since April, when its lenders, alarmed by further erosion in the price of natural gas, chopped its credit limit from $140 million to $110 million, with any excess due May 7.
That deadline has been extended five times, with the latest new deadline on Friday.
“It’s obviously not the full amount yet but it is one of the things we’ve been looking at and it shows good faith with the banks that we will be able to pay back that full amount,” said Susan Soprovich, director of investor relations for the company, on Thursday.
She said Compton will be asking lenders for a further extension and will consider other asset sales, among other recapitalization options. Meanwhile, the company has the working capital it needs to continue to operate, she said.
The buyer of Compton’s west central Alberta Cardium assets is private Calgary company Tallgrass Energy Corp., which Wednesday announced a plan to buy the package in a deal to close later this month, then merge with publicly traded Anglo Canadian Oil Corp.
The properties are producing about 450 barrels of oil equivalent per day and have proved reserves of 1.7 million boe and proved plus probable reserves of 2.1 million boe.
Compton said that translates to about $37,800 per flowing boe of production and $10.15 per boe of proved reserves.
The deal, which is subject to lender endorsement, is expected to close at the end of July.
In November, Compton’s management team led by chief executive Tim Granger abruptly resigned. Edward Bogle was appointed CEO in February.
The company’s first-quarter average production was about 12,500 boe/d, about 84 per cent gas. It resulted in cash flow from operations of $4.5 million.
Compton has planned a 2012 capital expenditures program of $14 million to $16 million.