Oil exploration business Infinity Energy Resources Inc. is on the lookout for capital.
The Overland Park, Kansas-based company is seeking cash from various sources to continue oil and gas exploration activities off the coast of Nicaragua, in the Caribbean Sea. Infinity is currently evaluating 2D and 3D seismic data so that it has more geological information about the area it has rights to, which amounts to about 1.4 million.
Infinity wants offers from third parties that want to buy an interest in the area in exchange for cash and an interest in exploration and development operations, Infinity says in a 10-K filed with the U.S. Securities and Exchange Commission on Feb. 4.
Consistent losses, a working capital deficit and lack of ongoing operations raise substantial doubt about the company's ability to continue as a going concern, or without the threat of liquidation, according to the filing.
It lists about $12.7 million in liabilities as of Dec. 31, compared with $11.7 the previous year. Infinity's listed assets decreased to about $9.6 million from $10.5 million at the end of 2013.
Infinity is planning to fund its business through raising money, including debt or equity financing, joint ventures, private offerings or sale of working or other interests, the company says in the SEC filing.
So far, it is in discussions with Granada Exploration LLC. In October, the two companies inked a letter of intent to join forces for the exploration process, but the agreement is still in negotiations. Should the deal go through, Parkersburg, West Virginia-based Granada will provide services in exchange for a working interest in the property.
Infinity sold a subsidiary in 2012 that explored for oil and gas in the U.S., called Infinity Oil and Gas of Texas Inc. It still owns subsidiary Infinity Oil and Gas of Wyoming Inc., but that business hasn't been active. Infinity's operations have been solely focused on the Nicaragua assets.
In 2013, Infinity converted debt owed to Amegy Bank and Off-Shore Finance LLC into preferred stock. The company also raised capital through a debt offering in order to sustain operations.
There are several struggling oil and gas companies on our Distressed Company Watch List. For more coverage of distress in the energy sector, see Oil Investors Flow Into Oil & Gas, and our previous Turnaround Tuesday column, Past Due On Interest Payments, Ivanhoe Continues Bondholder Negotiations.
Energy is one of the sectors, alongside retail and health care, where we're expecting to see distress in 2015. For more, see Distressed Debt Investment Opportunities Are Expected to Rise.