8th Feb 2016 13:15
LONDON (Alliance News) - Circle Oil PLC said Monday that it has signed a memorandum of understanding with a potential new gas customer in Morocco, SBS Porcher, as it warned its cash flow and financial position remain under "significant pressure."
The company said that it remains in talks with International Finance Corp, and the two are continuing discussions to find a solution to right-size its balance sheet in light of the further fall and continued volatility in the oil price.
Circle said it is more reliant on extracting funds from its operations in Morocco, as dollar receipts from its operations in Egypt remain limited and unpredictable, and this in turn means its cash flow and financial position remain under pressure.
As part of its arrangement with SBS Porcher a new pipeline would be constructed linking its existing Circle-owned pipeline in the northern Kenitra region to the Porcher factory in the central Kenitra area. Porcher would pay for this extension, with construction estimated to start in May 2016 and first gas anticipated to flow in the fourth quarter.
The gas price would be fixed with no linkage to oil prices, Circle Oil said, and the new contract will result in the company achieving "demonstrably higher gas prices", it said.
Shares in Circle Oil were down 15% at 3.30 pence Monday
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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