Afren sees shares plunge after saying it needs to raise funds

Afren’s shares plummeted after the oil company revealed it needs to raise funds in excess of its market capitalisation to avoid running out of cash amid falling oil prices.

The announcement came as the group has been hit by the suspension of operations in Iraq after finding dry wells. Afren had also recently dismissed a number of top executives after discovering unauthorised payments.

In a statement, Afren said: “In light of the significant dislocation in the industry and related financing markets resulting from the rapid decline in oil prices, the board has been reviewing the funding and liquidity requirements of the business and seeking to address how it manages the overall leverage position of the company.”

The firm is in talks with lenders of the $300m Ebok debt facility and will try to defer a $50m amortisation payment due on 31 January 2015.

The company had a cash balance of approximately $235m at 31 December 2014.

“Liquidity available to the company is significantly lower as a result of restricted and segregated cash balances in place to address operational requirements,” Afren said.

Shares plunged 59.37% to 7.18p at 10:34.