Shares in Gulf Keystone tumbled as much as 18.3 per cent to 9.8p this afternoon, after the oil producer warned it could struggle to meet debt repayments next month.
The Kurdistan-focused oil producer flagged "material uncertainties" regarding its ability to meet coupon payments in April and October, as well as the debt repayment of $250m April 2017 and $325 million in October 2017
"Strenuous efforts are currently underway to strengthen the balance sheet," Jón Ferrier, chief executive of Gulf Keystone, said.
Gulf Keystone is hamstrung by large debts that it took out when oil prices were high. This has been compounded by a lack of payments from the Kurdish Regional Government (KRG). The company said today it's still owed $178m by the KRG.
It comes as the company reported a net loss of $135m for the year ending 31 December, down from a loss of $248.2m a year earlier.
Analysts said that the current low oil price environment is making it difficult for Gulf Keystone to sell-off assets and shore up cash.
"Disappointingly, although perhaps not surprisingly (in the current environment), the corporate sales/asset divestment process that started in 2015 is no closer to yielding a solution," Mirabaud Securities said in a note.
"Thus, it seems the company is being forced down the route of negotiating with bondholders with the likely outcome being further dilution for shareholders."