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Move Aims to Strengthen Company Financially and Position It for Long Term Success
DENVER, CO --(Marketwired - February 17, 2016) - Venoco, Inc. today announced that it has chosen not to make the $13.7 million semi-annual interest payment due February 16, 2016 on its 8.875% senior unsecured notes as the company considers its options to reduce debt and strengthen the company's financial position.
Missing the February 16 interest payment does not cause an event of default or give noteholders any right to accelerate the due date for the notes or to exercise remedies against the company. An event of default would occur, however, if the interest payment isn't made by March 17, 2016, 30 days after February 16.
Venoco has sufficient liquidity to continue normal oil and gas operations and meet its regular financial obligations for some time. However, the declining price of oil and the ongoing closure of Plains All-American pipeline have presented significant challenges. The down pipeline, for which there is no certain restart date, has resulted in the curtailment of more than 50% of Venoco's production.
As with many other energy companies, Venoco has been exploring alternatives to address these challenges and strengthen its underlying financial position. As part of this effort, Venoco has engaged with its lenders in discussions around how best to reduce the company's debt and ensure its long term liquidity needs are met, including the possibility of restructuring the company's balance sheet.
"Today's announcement represents just one step toward better positioning our company to tackle the ongoing financial challenges facing our industry," said Mark DePuy, Venoco's CEO. "We are carefully weighing our options to reduce debt, and have had positive discussions with our lenders about the possibility of restructuring the balance sheet to do so."
"Our substantial cash position allows us to continue to meet all of our current obligations to pay our employees, vendors, and others, fund our ongoing operations and to pursue and advance other business opportunities," continued DePuy. "We look forward to using this interest payment grace period to continue discussions with our creditors aimed at achieving financial strength, while serving the long-term interests of our creditors, employees and the communities in which we operate. Venoco remains a remarkable company with a great future, driven by our operational excellence, exceptional workforce and strong energy-producing assets."
Mary Ellen Grant