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Oil and gas company Austral Pacific, which last week announced a $22 million net loss, says reports it is in financial difficulty are "misleading".
On March 31, Austral said its position raised questions as to its capability to continue as a going concern.
In the announcement, the Wellington-headquartered, Canadian-registered company said it was in breach of several covenants relating to a loan facility with Investec Bank (Australia) following delays in completing the Cheal project, Austral's Taranaki oil fields.
Chief executive Thom Jewell said although the company acknowledged short-term liquidity issues, it was executing a plan to manage that and to unlock the significant value in its Cheal asset.
Cheal holds $91 million of proven and probable oil and gas reserves, Mr Jewell said.
"We have a programme to address the company's short-term issues and we're very excited about working toward realising the full potential of our Cheal asset in the immediate term.
"Concerns have arisen from the fact that the Cheal field has taken longer than expected - and cost more than expected - and has not produced at the production levels anticipated."
He said Austral had not been able to meet completion clauses and covenant ratios specified in its agreements with its bankers.
"Technically, therefore, the company has had to account for the debt as a current liability."
Mr Jewell said Austral was fortunate to have a supportive banker working to ensure short- and long-term success.
"But, while the directors cited this caution, they also expressed confidence that the company will be able to continue in operation for the foreseeable future, and will be able to realise its assets and discharge its liabilities in the normal course of business."
Austral was on track to drill another two wells to boost Cheal production from its current level of 600bopd to over 1000bopd.
"Once we've delivered this phase of the Cheal project, which remains our priority, we can get on with the rest of our long-term strategy including 'Greater Cheal', Kahili and Cardiff."
Mr Jewell said while he could understand how the news media speculation arose, it was "unfortunate that the full picture was not presented".
Austral Pacific shares were down 5c to 75c about midday today, having been up to $2.37 a year ago.
- NZPA
