LEKOIL oil and gas exploration and production company with a focus on Nigeria and West Africa has announced that it has secured funding for the appraisal drilling and initial development programme activities on the Ogo field within OPL 310.
Lekoil 310 Limited, a wholly-owned subsidiary of LEKOIL, has entered into a binding loan agreement with the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar (“QIA”) in the amount of US$184.0 million (the “Facility”).
The Facility will be disbursed in five (5) tranches over eleven (11) months, with the first drawdown intended to occur in February 2020. The Company looks forward to providing further details on the intended work programme in short order.
The tranching of the drawdown of funds under the terms of the Facility is expected to enable LEKOIL to meet the costs commitments under the envisioned work programme as and when they arise.
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The Facility, which has a tenure of seven years from the date of the first disbursement, is secured against, amongst other things, the shares and assets of Lekoil 310 Limited (“Lekoil 310”) and Mayfair Assets and Trust Limited (“Mayfair”) and includes a moratorium on both the interest and principal repayments commencing from the date of the Facility until six months after the commencement of commercial sale of production from the field.
Repayment of the principal and interest will occur subsequently, in equal instalments, on a semi-annual basis. LEKOIL holds its interest in OPL 310 through Mayfair and Lekoil 310. The Facility is not secured against any other assets or interests of the Company, including its interest in the producing Otakikpo marginal field.
The annual interest rate payable on amounts drawn under the Facility is 3.72 per cent. with an upfront fee of 2.75 per cent. of the amount drawn under the Facility which is payable upon drawdown of the Facility.
A Debt Service Reserve Account will be established twelve months after the end of the moratorium period with a one-off amount equal to six (6) months of debt service standing to its credit. The Company will be required to meet a number of covenants on an ongoing basis in order for the Facility to remain in good standing, and adhere to QIA’s policies on procurement, environment and social responsibility and anti-corruption. The Facility is subject to an event of default clauses, and a provision that the employment of the Company’s CEO cannot be terminated without good cause during the term of the Facility.
The Facility was arranged by Seawave Invest Limited (“Seawave”), an independent consultancy firm specialising in cross-border transactions with an exclusive focus on Africa. After deducting the commission payable to Seawave by LEKOIL for arranging the Facility, and the upfront fee payable by LEKOIL to the QIA as set out above, the net proceeds of the Facility available to the Company are approximately US$174.3 million.
