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Antrim Energy's $30 Mln Swap Deal Should Allow Advance In Causeway Operations, Says Casimir

Casimir Capital analyst Ryan Galloway has kept his price target of $1.15 on Antrim Energy (TSE:AEN) after the oil and gas company entered into a $30 million payment swap agreement with Credit Suisse to fund further work at its fields in the North Sea.

Antrim has entered into a payment swap agreement with Credit Suisse to receive $30 million from the bank in exchange for 29 scheduled monthly repayments, at 5.1% fixed interest, with the first payment beginning in September.

The upfront cash should allow Antrim to further advance its Causeway operations, Galloway notes, including completion of a water injection well, expected to be operational in the second half of this year.

The cash injection should also fund initial front end engineering and design work on the Fyne Field.

The swap is backed by production from Causeway and Cormorant East. Antrim has also entered into a commodity swap for Feb/13 to Dec/15, promising the forward sale of 657,350 barrels of Brent at US$89.37/bbl.

Galloway also took note of the company's Fyne Field, which is fully appraised and estimated to contain 11.7 mmbbls of oil, with first production expected to come on stream for late 2014 at 12,000 barrels per day.

The analyst kept his $1.15 target on improved working capital flexibility and has a recommended speculative buy rating on the oil and gas producer.

Antrim said last Friday that oil production resumed at its Causeway field, which flows through the Brent pipeline via the Cormorant Alpha platform.

Production at Causeway was shut in for a brief period of 3 days, as the TAQA-operated pipeline system at Cormorant Alpha had a reported leak in one leg of the platform, which required shut in of more than 20 fields that connect to it.

Antrim also said at that time that its Cormorant East Field was expected to be back online shortly as well.

Further analysis determined that the leak impacted Alpha production alone, and not the adjacent fields, which flowed through Alpha to the Brent system.

"With the shutdown only lasting a few days last week, we anticipate minimal impact to Antrim's 2013 cash flows," noted Casimir's Galloway on Monday.

Shares of Antrim were trading flat on Thursday, at 55 cents in Toronto.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.