LONDON (ShareCast) - (Sharecast News) - Africa-focussed oil and gas development and appraisal company San Leon Energy updated the market on the OML 18 reserves-based lending (RBL) facility held by Eroton, the operator of OML 18, on Tuesday.
The AIM-traded firm first highlighted on 7 September 2017, and subsequently since, that depositing three future quarterly RBL repayments into a specified debt service reserve account (DSRA) was one of the conditions needing to be satisfied before the RBL lenders would allow a distribution of dividends from Eroton to its shareholders, of which San Leon is an indirect shareholder.

It said it had now been informed by Eroton that the RBL was successfully refinanced.

With a final repayment of $398m, the RBL had been repaid in full and replaced by a new reserves-based lending facility with Guarantee Trust Bank, for the same principal amount, with a number of "notable advantages".

The first advantage was that the original RBL had a repayment date in mid-2021, while the Guarantee Trust Bank RBL had a late-2025 repayment date, thus reducing quarterly repayments and freeing cash flow of more than $80m per year until mid-2021, for further drilling and development.

It also noted that the DSRA requirement under the Guarantee Trust Bank RBL was reduced to two future quarterly repayments which, combined with the lower quarterly repayment amounts, meant that only approximately $50m was required in the DSRA compared with more than $100m previously.

The refinanced interest rate was marginally higher at approximately 11%, compared to the 10% previously.

"I am delighted with the terms secured by Eroton for the RBL restructuring, and the impact which Eroton expects this to have, both unlocking substantial additional funds for operational activity, as well as lowering the DSRA hurdle to Eroton paying dividends to its shareholders," said San Leon Energy chief executive officer Oisin Fanning.

"This is a further material step in addressing previously-identified operational and financing issues at OML 18 and follows the recent announcements of new well drilling, and of the Nigerian National Petroleum Corporation (NNPC) paying most of their cash call arrears."

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