Scotland business

Iona Energy restructures debt after oil price fall

Gas flare Image copyright Thinkstock

A Canadian company operating in the North Sea has been forced to restructure its debt following the fall in the oil price.

Iona Energy raised $275m (£176m) in bond finance last year.

In the face of technical problems and a sharp fall in crude oil prices, the company is warning that it may break the bond covenants or conditions.

Iona Energy has faced interruption to supply through the gas pipeline system connected to the Huntington field.

The field, 127 miles (205km) east of Aberdeen, began production last year.

The Canadian-owned firm has a 15% share in that field, which is operated by E.ON with a 25% share. Premier Oil and Noreco have also invested.

In addition, there is a delay in the start to production from the Orlando field, also in the central North Sea and close to the Ninian Central platform.

Iona Energy has a 75% stake in that field, and is the operator of it.

As part of the new management team, executive officer Tom Reynolds commented: "The Company is working on a range of measures to safeguard the position of all stakeholders.

"Our strategy is to strengthen and diversify our production base through acquisition which will also facilitate an orderly refinancing of the bonds.

"We continue to see robust support from lead RBL banks to support the range of transactional opportunities we are reviewing."

The news comes as oil companies and service providers are cutting staff and investment to save money.

Robin Allan, chairman of the independent explorers' association Brindex, told the BBC that the industry was "close to collapse".

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