CALGARY—Lightstream Resources has outlined a plan to reduce its debtload by $1.175 billion—a move that would see secured creditors ending up with 95 per cent of the struggling oil and gas company’s equity.
Current shareholders would end up with 2.25 per cent of the equity in a revitalized Lightstream, which has been unable to keep up with its interest payments since the collapse in oil prices that began in late 2014.
The plan outlined by Calgary-based Lightstream would reduce its annual interest payments by about $112 million.
Lightstream had previously warned that it wouldn’t be able to make a $41.7-million interest payment on June 15, starting the clock on a 30-day grace period that ends Friday.
The proposal would require numerous approvals, including from Lightstream’s secured and unsecured creditors, its shareholders and the Alberta’s Court of Queen’s Bench.
The company says there will be an initial court hearing on the matter today.
Lightstream was built through a string of acquisitions starting in 2009. It boasts a strong base of light oil production in Alberta and Saskatchewan but its debt totalled $1.6 billion at the end of 2015.
Lightstream launched a sales process for its core Bakken light oil producing assets in Saskatchewan in late 2014 but has been unable to find a suitable buyer in a down market, Wright said.
The company’s annual average production in 2015 fell 22 per cent to 31,392 barrels of oil equivalent a day due to asset sales and lower investment in new wells. It reported a net loss of $946 million, including a non-cash writedown of $661 million to account for lower anticipated future commodity prices.