The company noted that it has engaged with creditors and it is securing voluntary binding agreements with a significant majority of them - to reduce settlement payments, reschedule, and secure certainty about the future cost of supply terms during 2019.
It said it is confident that a minimum of US$0.7mln of settlement discounts will be secured, which would represent around 17%.
The company noted that it had a US$0.5mln cash balance at the end of January. It believes that this will be sufficient to maintain operations until the receipt of the proceeds of subscription funds in February 2019.
Cabot additionally said that it is concluding its discussions with High Power Petroleum and other significant shareholders over a proposed US$3mln equity fundraising, sufficient to settle the material overdue Canadian trade creditors and certain creditors in the UK as well as provide short term working capital through to the end of the first quarter.
Additionally, the company said it would also have to approach the funding market again, “probably in early 2019”, to support a growing business case.
“The directors believe that the company's assets and reserves remain fundamentally strong, but the new management team has needed to first address areas of business control in order to realise this growth potential,” the company said.
“The directors are reasonably optimistic that the company can raise debt and additional equity funding from existing and new shareholders, as it has done in the past, but it is not wholly within the company's control and as such represents a material financial uncertainty.”
It added that failure to secure the first fundraising in February would cast significant doubt upon the group's continued ability to operate as a going concern.
Cabot also highlighted that the discount spread of the Edmonton oil price and West Texas Intermediate has narrowed. It has been restored to normal historic levels – at around 8% to 10% on average.
The improvement follows regional market restriction, restricting production volumes. The restrictions don’t impact on the company’s operations (it applies only to production over 10,000 barrels of oil per day).