NEW YORK ( TheDeal) -- Energy-related services and rentals provider Enseco Energy Services has secured a forbearance agreement from lender HSBC Bank Canada through May 31, giving it more time to look for alternative financing.
The Calgary, Alberta-based supplier of directional drilling, production testing and frac flowback services, announced on May 1 that the company has until May 31 to obtain alternative financing and is actively pursuing other financing.
The company's C$4 million revolving extendable facility is priced at prime plus 215 basis points and comes due on demand.
According to the forbearance agreement, Enseco Energy owes C$8.71 million on the revolving operating facility; C$8.55 million on the term loan and C$4 million on the revolving extendable facility.
Through the forbearance agreement, the interest on Enseco Energy's debt was increased by 150 basis points. The forbearance agreement also said that the company's revolving operating facility was reduced to C$12 million on April 15 and C$10 million on April 30, the company's forbearance agreement said.
Enseco Energy is having trouble meeting its debt service coverage ratio and its current ratio covenants on its loans. Without the forbearance agreement in place, HSBC Bank Canada could demand to be repaid in full, the company's financial reports said.
According to the company's most recent financial report, filed with Sedar on April 21, Enseco Energy had a C$1.9 million operating loss and a C$14 million working capital deficit as of Dec. 31. The company had a C$3.53 million net loss for the year ending Dec. 31.
Enseco Energy has C$60.85 million in assets and C$40.36 million in liabilities as of Dec. 31. It had C$800,000 in cash on its balance sheet as of Dec. 31
In its annual report, auditor KPMG said that there is material uncertainty that may cast significant doubt about Enseco Energy's ability to continue as a going concern due to the anticipated upcoming covenant breaches.
Enseco Energy provides energy-related services and rentals to the upstream oil and gas industry. The company's U.S. subsidiary, Enseco Energy Services USA, operates in Minot, N.D; Casper, Wyo.; and Denver. Most of the company's operations take place in Canada in the Western Canadian Sedimentary Basin.
The company's stock, which trades on the Canadian Venture Exchange, under the symbol ENS, closed Monday at at C$0.055, down more than 31%.
Enseco Energy's CEO Kent Devlin and the company's CFO, Blair Layton, couldn't immediately be reached for comment on Monday.