The Africa Finance Corporation (AFC) has underwritten $65 million of a $100 million senior secured term loan facility for Depthwize Nigeria Limited, for the acquisition and upgrade of swamp rigs.
AFC, in conjunction with JP Morgan, is the co-mandated lead arranger for the transaction.
Depthwize is a Nigerian company established in 2011, as an indigenous shallow water and swamp barge drilling contractor.
Depthwize operates the assets of United States-based Megadrill Services Limited, its technical partner, in Nigeria. The company currently operates two high temperature high pressure (HTHP) swamp rigs.
Depthwize’s HTHP rigs are some of the most sophisticated in the world, with special automated features technologically ahead of other, more conventional, rigs.
The rigs are designed for drilling efficiency and safety, and will enable the company to drill challenging wells in the Niger Delta.
The company is expanding to meet expected new demand from both international oil companies and emerging indigenous exploration and production (E&P) companies.
Acquiring rigs with the capacity to drill to a depth of 30,000ft and with the ratings that enable the company to drill challenging HTHP wells is anticipated to act as a key differentiator, providing Depthwize with access to new swamp drilling opportunities in the Niger Delta.
The loan facility will be used to finance capital expenditure related to the acquisition of new and the upgrade of existing HTHP swamp rigs, according to a statement made available to BusinessDay.
Andrew Alli, president/CEO, AFC said: “Financing has been one of the primary challenges faced by indigenous oil service companies in Africa. Given changing industry dynamics, and the anticipated opening up of new acreage for exploration and development, the AFC is pleased to play a catalytic role in positioning strong indigenous companies such as Depthwize, which has the right operational and project management expertise, to take advantage of emerging opportunities in the Niger Delta. Depthwize is well placed to become one of the leading drilling contractors in Nigeria and we are pleased to be playing a part in the realisation of this potential.”
Also commenting on the loan facility, Uche Dimiri, managing director, Depthwize said: “We are pleased to partner with AFC in building a world class oil service company through which the currently under-developed reserves of the Niger Delta can be brought into production with potential economic and social benefits for the country at large. Depthwize has acquired state of the art rigs, which we have combined with world class operational and project management expertise to operate in difficult swamp conditions. We are uniquely placed to take advantage of growing demand from both emerging indigenous E&P operators and established IOCs.”
AFC, an African led international financial institution, was established in 2007 with an initial capital base of $1 billion, to be a catalyst for private sector infrastructure investment across Africa.