 "Energy asset sale: Niko hires advisor")
In a statement on Wednesday, it announced it had engaged Jefferies LLC as financial adviser. The advisor’s mandate includes assisting Niko in pursuing strategic alternatives, including the sale of assets, merger, outright sale of the company and refinancing of existing debt.
Niko holds a 10 per cent participating interest in Reliance Industries’ D6 gas block in the Krishna-Godavari basin off the Andhra Pradesh coast and has working interests in six other blocks, three of which are producing gas. In two exploration blocks, it has undeveloped discoveries.
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Though today’s announcement does not list any particular asset that is likely to be sold, the company on November 4 had said the terms of its term loan facilities limited the funding of capital expenditure and working capital requirement in these areas.
“The company is evaluating its options for these subsidiaries as part of its strategy of maintaining optionality in its exploration portfolio. It is working on selling or farming out interests in many of its exploration production sharing contracts, rescheduling its exploration commitments, and settling its vendor liabilities,” said the statement.
The company had earlier announced selling off its interest in seven production sharing contracts in Indonesia. “There is significant uncertainty regarding whether these efforts will be sufficient to allow certain of the company’s exploration subsidiaries to meet existing and future obligations and continue activities in the future,” it said.
It also said the revised gas price would provide incremental revenue to Niko of approximately $4 million from the MA field in the KG-D6 block for the period from November 1, 2014, to March 31, 2015. The benefit of the revised price on the company’s share of gas sales from the D1 D3 fields, however, will not be available to Niko unless a cost recovery dispute is resolved in the favour of the contractors of the D6 block.
Niko said revenues from its producing assets in India and Bangladesh would be sufficient to satisfy the cash requirements of its operating subsidiaries in the two countries, its corporate general and administrative costs, and its interest obligations for at least the next 12 months, provided its previously planned investments for the development of reserves in the R-Cluster and Satellite Areas in the D6 block and in NEC-25 are deferred.