Page 17 - AfrOil Week 05 2021

AfrOil NEWS IN BRIEF AfrOil

INVESTMENT days after the well test results of the first develop- Following this acquisition, TNOG will now
ment well on the Oza oilfield have been delivered operate the OML 17 onshore oilfield on behalf
San Leon Energy issues to San Leon. of the Nigerian National Petroleum Corpora-
Update regarding Oza field preparation: Well tion, which owns the remaining 55% working
update on investment in site and drilling location preparation for the interest.
Professor Benedict Oramah, President of
Oza-1 well re-entry and first horizontal develop-
Oza field ment well have progressed, and the Company is Afreximbank, said: “This transaction further
pleased to report that these steps have now been underscores Afreximbank’s commitment to
Further to its previous announcements, San completed. The road to the well site location has ensuring that indigenous African companies are
Leon, the independent oil and gas production, been rebuilt and construction of a concrete drill- able to play a more dominant role in the opera-
development and exploration company focused ing pad, concrete mud pit, buildings and related tions of specialised oil and gas assets in an indus-
on Nigeria, is pleased to provide an update on infrastructure have also been completed. Long try hitherto dominated by the International Oil
the funding arrangements by Decklar Petroleum lead time items needed for the Oza-1 re-entry Companies. TNOG as the Operator of OML 17
Ltd to develop the Oza oilfield in Nigeria. When have been secured and a drilling rig currently will invest in an accelerated production ramp up
fully disbursed, the funding is expected to be suf- located near the field has been identified and thereby boosting foreign exchange earnings and
ficient to re-establish oil production and provide contracted. employing more Africans. This resonates with
development funding for the Oza oilfield. As previously reported, an export pipeline our mandate. We congratulate Heirs Holdings
Update Regarding Funding Arrangements: that ties the Oza oilfield production into the for keeping the Africa flag flying.”
The due diligence required to finalise the term Trans Niger Pipeline and continues on to the Chairman of Heirs Holdings, Tony Elu-
debt to Millenium Oil and Gas Co. Ltd, Decklar’s Bonny Export Terminal, operated by Shell Pro- melu, said: “The transaction is a testament to
local partner, arranged with a Nigerian bank and duction Development Co. (SPDC), is already in the opportunity in Nigeria. Our acquisition of
the trading subsidiary of a large multinational oil place. Infrastructure also in place at the Oza oil- OML 17 and important related assets, signifi-
company active in Nigeria has progressed and field includes a lease automatic custody transfer cantly advances Heirs Holdings’ strategic vision
the final report by the independent technical unit fiscal metering system, infield flow-lines, of creating Africa’s leading integrated energy
consultant that they contracted, which is based manifolds and a rental 6,000 bpd early produc- company. We are building a business that will
on a review of reserve and production data and tion facility. These production and pipeline facil- ensure that African natural resources drive
financial projections, has been issued. The defin- ities should ensure that oil tested from the Oza-1 African power networks and ensure value cre-
itive loan documents are now being finalised and well re-entry and early production can be imme- ation occurs in Africa. I would like to take the
are anticipated to be issued by the end of the first diately delivered and sold on an expedited basis. opportunity to thank Afreximbank, and Presi-
week of February 2021. San Leon Energy, February 01 2021 dent Oramah for their strong support and shared
The details of the funding plans for the vision of the transaction.”
development of the Oza oilfield were included Afreximbank, January 28 2021
in the Company’s announcement of Septem- FINANCE
ber 1, 2020. In particular, San Leon has entered VAALCO enters into crude oil
into a subscription agreement with Decklar. Afreximbank disburses
The Subscription Agreement entitles San Leon derivative contracts
to purchase $7.5mn of 10% unsecured subor- $250mn in support of
dinated loan notes of Decklar and 1,764,706 VAALCO Energy has entered into crude oil
ordinary shares of Decklar (representing 15% of TNOG’s acquisition of commodity swap agreements for a total of
the enlarged share capital of Decklar) for a cash 709,262 barrels at a Dated Brent weighted aver-
consideration of $7.5mn and NHN1,764,706 45% stake in OML 17 age price of $53.10 per barrel for the period from
(circa $4,600) respectively. Aside from an initial and including February 2021 through January
deposit of $750,000, the balance of San Leon’s African Export-Import Bank (Afreximbank) has 2022.
proposed investment in Decklar is being held in disbursed $250mn of the $1.1bn that supported These swaps will settle on a monthly basis.
escrow and will be released upon satisfaction (or the acquisition by TNOG Oil and Gas Limited The Company is hedging a portion of its pro-
waiver) of the final conditions precedent con- (TNOG) of a 45% stake in OML 17 onshore duction volumes, excluding volumes attributable
tained in the Subscription Agreement. A further oilfield. to acquiring Sasol’s interest in the Etame field, to
announcement will be made in due course in With this $250mn Reserve Based Lending protect cash flows which will be used to fund the
relation to the completion of the Subscription facility, Afreximbank was the largest lender, 2021/2022 drilling programme. The Company
Agreement. underwriting about a quarter of the financing will review its hedging positions following the
In addition, and as previously announced, that enabled TNOG to buy stakes in OML 17 closing of the Sasol acquisition which it expects
Decklar and San Leon have entered into an from Shell Petroleum Development Co. (SPDC), will occur in February.
option agreement that, at San Leon’s sole discre- Total E&P Nigeria Ltd and Eni. Other participat- Cary Bounds, Chief Executive Officer, com-
tion, entitles San Leon to purchase an additional ing lenders include Africa Finance Corporation, mented: “We are pleased with the recent rise in
$7.5mn of Loan Notes and 2,521,008 Decklar Union Bank, Shell, Hybrid Capital and Schlum- crude oil prices that should further increase our
Shares (representing an additional 15% of the berger, with TNOG advised by United Capital free cash flow margins. We thought it prudent
enlarged share capital of Decklar, together with a Plc. to hedge a portion of our production to under-
gross-up of the original 15% so as to provide San The five-year $1.1bn facility, which was pin our cash flow to support the upcoming
Leon with a total of 30% of the enlarged share signed in December 2020, despite the economic 2021/2022 drilling programme. We will consider
capital of Decklar) for a cash consideration of headwinds caused by the COVID-19 pandemic, hedging additional volumes after we close on the
$7.5mn and NGN2,521,008 (circa $6,500), was led, as Mandated Lead Arrangers, by Afrex- acquisition of Sasol’s interest in the Etame field.”
respectively, at any time until the date that is 45 imbank, Standard Chartered Bank and ABSA. VAALCO Energy, January 28 2021

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