San Leon Energy PLC - Provides funding for development of Oza Field
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
("San Leon" or the "Company")
San Leon provides funding for development of Oza Field,
· 15% equity interest in Decklar, with an option to increase to 30% equity interest based on drilling results;
· Decklar is the Risk Service Provider to the operator of the Oza field, onshore
· Cash sweep in San Leon's favour until loan and interest repaid; and
· Attractive fiscal terms on licence and existing infrastructure in place.
San Leon, the independent oil and gas production, development and exploration company focused on
The Oza Oil Field
The Oza Oil Field was formerly operated by
In 2003, the Oza Oil Field was awarded to Millenium, having won the bid during the Marginal Fields Licensing Round. Since Millenium's acquisition of the Oza Oil Field in 2003, approximately
Decklar intends to fast-track the initial development of the Oza Oil Field including a re-entry on the existing Oza-1 well, anticipated to test three oil bearing zones and place the well into production from two of the three zones tested. The drilling rig is expected to then be skidded on the same location as Oza-1 to a new drilling slot and a development well is expected to be drilled horizontal into the third zone tested in the Oza-1 well re-entry. The Oza-1 well and new horizontal development well are anticipated to generate significant production levels and cash flow in an abbreviated time frame. The Oza Oil Field development is anticipated to then continue with one or two more existing well re-entries and additional development drilling with the potential for eight to ten wells being drilled in total for the full field development. Additional early production and central processing facilities will be added as required to accommodate additional production levels from the Oza Oil Field's development activities. Decklar estimates that first production will be three to four months following the drawdown of the financing described within this announcement.
The Oza Oil Field has significant export and production processing facilities and infrastructure already in-place and operational, which will allow for the export and sale of crude oil from the Oza-1 well re-entry, the initial Oza horizontal development well and future wells.
San Leon has entered into a subscription agreement (the "Subscription Agreement") with Decklar. The Subscription Agreement entitles San Leon to purchase
The Subscription Agreement provides for certain conditions precedent to be confirmed prior to finalising and issuing the Loan Notes and Decklar Shares, including entering into an agreed form of shareholders' agreement in respect of Decklar and the restructuring of certain historical indebtedness by the owner/operator of the Oza Oil Field, Millenium, to the satisfaction of San Leon at its sole discretion and the approval of the transaction contemplated by the Subscription Agreement by the
In addition, Millenium has entered into a non-binding term sheet with a local Nigerian bank and the trading subsidiary of a major oil company for up to
Concurrently with entering into the Subscription Agreement, San Leon has advanced
San Leon will be allocated one seat on the board of Decklar. Pending development of the Oza Oil Field, Decklar is yet to report meaningful financial information and, in the last audited accounts for the year ended
The terms of the Loan Notes provide for an interest rate of ten (10)% per annum, which accrues on a quarterly basis and will have a maturity date after five years and with payments being made from available funds from operations (after taking into account any required debt servicing payments, general and administrative expenses, approved joint venture capital and operating costs required to be funded by Decklar under the RSA with Millenium, taxes and other statutory payments) (the "Available Funds"). All Available Funds shall be applied to the payment of interest and principal in respect of the Loan Notes until they are repaid in full. If the Option Loan Notes are subscribed then, 50% of the Available Funds will be applied to payment of interest and principal in respect of the Option Loan Notes until they are repaid in full. The Loan Notes are unsecured, subordinated and contain customary events of default. The Loan Notes do not contain any financial or other maintenance covenants.
"Oza is a further transaction in line with our strategy of investing in assets with expected near-term cash flow, where the initial investment is considered to be of limited risk (as this is an existing field with historical production, and San Leon will receive a cash sweep) and where there is material upside. Our technical team has reviewed the field data and work plans in detail, and is confident of the approach being taken."
"The structure of the transaction, which sees San Leon provide a repayable loan at an attractive interest rate and with an additional significant equity kicker, gives us the opportunity again to generate a meaningful return from repayments in the coming years as well as looking forward to a longer-term dividend return from our shareholding. The option to scale up our investment following receipt of the result of the new drill proof-of-concept well on equivalent terms to the initial investment, also provides San Leon with valuable informed optionality."
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+353 1291 6292
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(Nominated adviser and joint broker to the Company)
+44 20 3328 5656
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+44 20 7886 2500
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(Joint broker to the Company)
+44 20 3463 5000
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(Financial Public Relations)
+44 20 7920 3150
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Plunkett Public Relations
+353 1 230 3781
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