Accord on Debt Is Crucial, Dome Petroleum Says
Dome Petroleum Ltd. said its continued existence depends on implementation of a recently proposed interim debt-deferral arrangement, unless oil prices rise or interest rates or taxes decline.</br></br>The Calgary, Alberta-based oil company, in a 10-K annual report filed with the U.S. Securities and Exchange Commission, said it intends to implement the interim plan May 1 whether or not its 56 lenders agree. Dome said it will approach its lenders to develop a permanent plan before the interim one expires June 30, 1987.</br></br>The company warned that failure to reach an overall agreement, or at least waivers or extensions on its debt obligations, could lead to a default. That in turn could result in lenders demanding immediate payment of as much as $5.9 billion (Canadian) of Dome's long-term debt.</br></br>In the SEC filing, Dome also disclosed that it may have to write down the value of its oil and gas reserves as a result of falling oil prices. Although it doesn't use U.S. accounting rules, Dome said that under such rules it might face a $1 billion (Canadian) charge using a crude oil price of $14 a barrel as the value of its reserves.</br></br>Dome said a write-down might also be required under Canadian accounting rules, but it declined to discuss the possible size. It also said a write-down might be needed if recent oil-price declines are determined to be "other than temporary," and if there aren't any compensating changes in other factors used in the calculation of future net revenue. Such a determination would be made "in consultation with its petroleum consulting engineers," Dome said.