Troy Hayden will step down from the helm of Tap Oil as the company swings the axe on jobs and operations so it can meet its now-restructured debt repayment obligations.
After cancelling the $4 million share purchase plan component of its recently announced capital raising, the Perth-based oil and gas company has announced a three-for-five rights issue to raise $7.75 million.
Tap Oil’s major shareholders Risco Energy Investments and Northern Gulf Petroleum have committed to subscribe for $1.5 million each, and have agreed to underwrite subscriptions up to about $1.6 million each, while Patersons Securities has underwritten the balance.
"The prolonged period of lower oil prices has significantly impacted the company's revenue generated from its interest in the Manora oil field in Thailand, as well as reducing the company's borrowing capacity under the BNP facility," Tap Oil said in a statement.
Tap Oil said BNP Paribas would allow the company to reduce the minimum liquidity amount it needs to hold, from $US10 million to $US3 million, if it can raise $US5 million and hedge half of its Manora production over six to 12 months.
Meanwhile, as flagged in December, the company has introduced a number of cost reduction initiatives today, including reducing its full time staff from 18 down to seven, deferring non-core activities, and reducing costs at its Manora oil project.
The job cuts will begin in April, saving $1.7 million annually.
“As part of these cost cutting initiatives the company has decided to seek to divest its Australian exploration portfolio that has material outstanding commitments, and to farm-out, defer or materially reduce the company’s expenditure in Myanmar,” Tap Oil said.
“The company has also significantly reduced its business development activities.”
Alongside the cost reductions, Mr Hayden will also be stepping down as chief executive and managing director of the company from June 1, but will remain in a part-time role until a replacement is found.
His termination benefits are estimated at $525,000.
Tap Oil made a $US54 million ($A72 million) full-year loss in 2015, worse than 2014's $US44 million ($A58 million) loss.
Tap Oil shares were 14 per cent lower to 8.6 cents each at 10:30am.