Venoco misses interest payment, looks to restructure debt
Venoco is looking to restructure its debt as the Refugio oil spill fallout and oil market decline has hindered operations.
The Denver-based oil producer that has offices in Carpinteria has chosen not to make the $13.7 million semi-annual interest payment due Feb. 16 on its 8.875 percent senior unsecured notes as the company considers its options to reduce its debt and potentially restructure its balance sheet.
While the missed payment would not cause a default, not acting in the 30-day grace period ending March 17 would, Venoco said. The company said it has enough liquidity to continue normal oil and gas operations for some time.
“Our substantial cash position allows us to continue to meet all of our current obligations to pay our employees, vendors, and others, fund our ongoing operations and to pursue and advance other business opportunities,” CEO Mark DePuy said in a news release. “We look forward to using this interest payment grace period to continue discussions with our creditors aimed at achieving financial strength, while serving the long-term interests of our creditors, employees and the communities in which we operate.”
Venoco is not alone. A total of 74 U.S.-based energy companies are expected to have significant difficulties sustaining their debt, according to a Moody’s Investors Service report.
Venoco’s production has been cut in half since Plains All American Pipeline shut down Line 901 and Line 903 following May’s Refugio oil spill.
ExxonMobil has been virtually shut in since the oil spill. Freeport McMoRan, which has a presence in North Santa Barbara County, is contemplating spinning off its oil and gas operations. Oil operators are shedding jobs and hunkering down throughout the region.
“We are carefully weighing our options to reduce debt, and have had positive discussions with our lenders about the possibility of restructuring the balance sheet to do so,” DePuy said.
Venoco reported a net loss of $203.3 million for the third quarter of 2015 compared to a profit of $39.5 million for the third quarter of 2014. Revenue was $11.2 million, down from $57.9 million the previous year. The company paid more than $7.2 million in property taxes in 2014 in Santa Barbara and Ventura counties.
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