Indonesia’s KrisEnergy seeks covenant headroom amid sagging oil prices

By Susanna Moon

Chicago, Nov. 12 – KrisEnergy Ltd. said it began a consent solicitation to amend its S$130 million 6¼% series 1 notes due 2017 and S$200 million 5¾% series 2 notes due 2018.

KrisEnergy is in compliance with the notes’ financial covenants but is asking for more financial covenant headroom amid challenging market conditions, especially the drawn out downturn in oil prices, according to a company press release.

The company’s sale of crude oil and liquids accounted for about 60.4% of its revenue in the nine months ended Sept. 30 and, as it boosts crude oil production, is looking to curb the exposure to oil price volatility.

When the notes program was established in May 2014, the price of Brent crude was about $110 per barrel, compared with the average price of $56.60 per barrel for the first nine months of 2015, the company noted.

The volatility in oil prices is likely to continue with any slowing in the global economic recovery, a rise in U.S. interest rates or relief in sanctions on Iran, the company added.

The company said it has been responsive to the slump in oil prices and that it has taken steps to implement cost management measures to try to minimize the damage.

“The persistent uncertainty in the international oil markets is stoking volatility in prices even at these relatively low levels, and there is wide variation in views as to how long this will continue,” Keith Cameron, the company’s chief executive officer, said in the press release.

“This amendment reflects our focus on prudently managing our business to provide some headroom and flexibility in these challenging times while continuing to position the company for future growth and long-term value creation.”

Standard Chartered Bank is the consent solicitation agent.

The issuer is a Jakarta-based oil and gas company.

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