Cabot seeks emergency cash

Shares in Cabot Energy capitulated yesterday after the firm said it is fighting for survival and has commenced crunch talks with investors to raise emergency cash that will allow it to stay afloat.

The oil and gas exploration and production company said it is in “advanced discussions” with investors for an equity fundraising, the failure of which would jeopardise its ability to operate as a going concern.

Cabot, which is quoted on the Alternative Investment Market, said: “The company has the continued support of its majority shareholder, High Power Petroleum, and the directors are in advanced discussions with the company’s other significant shareholders regarding an equity fundraising.

“Failure to complete a fundraising in January 2019 would castsignificantdoubtuponthe company’s continued ability to operate as a going concern as it may be unable to realise its assets and discharge its liabilities in the normal course of business.”

The business also said the fundraising would take place at a deep discount compared to the market price of its shares.

The money is needed to settle overdue bills owed to Canadian trade creditors and provide short-term working capital that would see Cabot through to the end of the first quarter, when it would again tap shareholders for more cash.

The cash squeeze is the result of cost overruns in Cabot Energy’s Canada work programme.

The company also said in September that funding would be required to grow production in Canada and develop its Italian assets.

“The directors are reasonably optimistic that the company can raise additional equity fundingfromexistingandnew 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,” Cabot Energy said.