Page 18 - LatAmOil Week 31

LatAmOil NEWS IN BRIEF LatAmOil

Highlights: United has been assigned Tullow Morant licence covers an extensive area and syndicate of 30% of the 4.75% interest margin on
Jamaica Ltd’s 80% equity in the Walton Morant numerous follow-up structures have been iden- any undrawn amounts throughout the term. The
licence for a nominal fee, leaving the Company tified that would be significantly de-risked on RCF will be undrawn at the start. The RCF will
as operator and 100% equity holder; initial success at Colibri. not be subject to typical periodic redetermina-
exploration period extended for 18 months by It is estimated that United will have acquired tions. Covenants have been harmonised with the
the Government of Jamaica; highly prospective the results of approximately $30mn of invest- Corporation’s existing covenants on its May 2025
frontier basin with compelling evidence for the ment by the previous operator in the licence. senior unsecured notes.
presence of a working petroleum system; work United Oil & Gas, August 03 2020 Credit Suisse, Banco Davivienda and Cit-
programme underway to further de-risk the igroup were Lead Joint Arrangers and Joint
Colibri prospect and other targets ahead of a Bookrunners on the RCF.
drill decision; a farm-out process is ongoing, and FINANCE On July 31, 2020, a subsidiary of the Corpo-
with United now as operator, we look forward to ration entered into a $75mn senior unsecured
taking full ownership of the process and driving Canacol Energy Ltd. bridge term loan with a syndicate of banks.
it forward; the Colibri prospect has been inde- Notable terms of the Bridge include an interest
pendently estimated to contain gross unrisked announces closing of rate of LIBOR + 4.25%, a two-year term, and the
mean prospective resources of 229mn barrels, Corporation’s ability to repay the Bridge at any
and up to 513mn barrels in a high-case scenario. new credit agreements time within the term without penalty. Within
Following agreement with the Jamaican 30 days of the July 31, 2020, closing the subsid-
Government, Tullow Jamaica’s 80% equity and Canacol Energy is pleased to provide the follow- iary is obligated to draw the first $25mn of the
operatorship has been transferred to United for ing update on certain new and existing credit Bridge, with the remaining $50mn to be avail-
a nominal fee, and the PSA has been amended facilities. able to be drawn at any time up to 12 months
to extend the Initial Exploration Period for 18 Jason Bednar, CFO of Canacol commented: from the closing date. The subsidiary will pay a
months. A portion of the licence has been volun- “As at June 30, 2020, Canacol maintained its commitment fee to the syndicate of 30% of the
tarily relinquished, leaving a more focused area strong balance sheet and liquidity including 4.25% interest margin on any undrawn amounts
of around 22,400 square km that still incorpo- approximately $59mn of cash, with our robust throughout the availability period. Covenants
rates all of the identified prospectivity. 2020 capital and dividend programs being have been harmonised with the Corporation’s
With the extension to the initial exploration funded through existing cash and operating existing covenants on its May 2025 senior unse-
period, United now has until January 31, 2022, cash flows. Adding to the Corporation’s exist- cured notes.
before the drill-or-drop decision is required. ing financial flexibility, we have re-profiled the Credit Suisse, Banco Davivienda, Citigroup
United plan to complete a work programme terms on one existing credit facility and entered and Itau were Lead Joint Arrangers and Joint
to further de-risk the high-graded Colibri pros- into two new credit facilities, with Credit Suisse Bookrunners on the Bridge.
pect and perform detailed interpretation of the acting as the Administrative Agent on all facili- The Bridge was entered into by the Can-
numerous follow-on targets, including Moon- ties, as described below. We would like to thank acol subsidiary that is intended to be used to
raker,Thunderball, Moneypenny, Jaws, Gold- Credit Suisse and all syndicate banks for their construct and own the Medellin pipeline, with
finger, Vesper, Oriole, Earspot and Rumpspot. continued support of Canacol.” Canacol being the guarantor throughout the
This cost-effective activity will be informed by In December, 2018, the Corporation entered outstanding term of the Bridge. The initial draw
the feedback from companies who have engaged into a credit agreement for an amount of $30mn from the Bridge will be used for expenditures
with United and the previous licence operator with Credit Suisse. The 2018 Credit Facility was such as engineering and environment per-
in the data room process to date. It is believed to mature in December 2022, with equal quar- mitting, with the following $50mn currently
this work will have a significant impact on the terly installments starting June 30, 2020. The budgeted to order long lead time items needed
continuing farm-down process. 2018 Credit Facility carried interest at a fixed rate for construction. It is anticipated that during
The amended Walton Morant Licence covers of 6.875% per annum. the term Canacol will divest between 75% to
an area of 22,400 square km and has numerous In June 2020, the Corporation re-profiled 100% of the shares of the subsidiary to an equity
plays and prospects already identified across the 2018 Credit facility with the notable changes partner, while maintaining up to a 25% working
three separate basins. Eleven wells have been being an interest rate of LIBOR + 4.25% (with interest in the ownership of the pipeline project.
drilled to date (nine onshore, two offshore), and current LIBOR rates being approximately Detailed discussions are ongoing with respect to
all bar one contained hydrocarbon shows. 0.30%), and an extension of the first amortisa- this project with interested equity partners and
United farmed in to the Walton Morant tion payment to now begin on December 31, a syndicate of banks. Once equity partners and
licence in 2017. Since then, significant seismic 2021, and mature on June 30, 2023 (seven equal bank syndicate agreements have been signed,
survey work has been carried out on the licence, amortisation payments). This 18-month exten- and any applicable conditions precedent have
including the acquisition and interpretation sion adds approximately $16mn of additional been met, it is anticipated the long-term funding
of 2,250 square km of 3D seismic data and the liquidity to the Corporation through the end of will be advanced and the Bridge will be repaid,
re-interpretation of 3,650 km of existing 2D seis- 2021, based on principal repayments alone. No thus freeing Canacol of its guarantees on the
mic data. covenants were changed. Bridge.
Based on this new data, United invested in On July 31, 2020, the Corporation entered Canacol is a gas exploration and production
an updated independent Competent Persons into a $46mn senior unsecured revolving company with operations focused in Colom-
Report for the licence in 2019. This identified a credit facility (RCF) with a syndicate of banks. bia. The Corporation’s common stock trades
total gross un-risked mean prospective resource Notable terms of the RCF include an interest on the Toronto Stock Exchange, the OTCQX in
of 229mn barrels on the Colibri Prospect alone. rate of LIBOR + 4.75%, a three-year term and the United States of America, and the Colom-
In high-case scenarios, the gross unrisked the Corporation’s ability to repay/redraw the bia Stock Exchange under ticker symbol CNE,
resource estimates for Colibri suggest up to RCF at any time within the term without pen- CNNEF, and CNE.C, respectively.
513mn barrels could be recovered. The Walton alty. Canacol will pay a commitment fee to the Canacol Energy, August 04 2020

P18 www. NEWSBASE .com Week 31 06•August•2020