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San Leon Energy invests US$15mln in Energy Link Infrastructure

San Leon's investment is designed to enhance the value of its Nigerian operations

San Leon Energy PLC -

San Leon Energy PLC (LON:SLE) has revealed that it is investing US$15mln in Energy Link Infrastructure (Malta) Ltd, the company which owns the Alternative Crude Oil Evacuation System project.

The ACOES is being constructed to provide a dedicated oil export route from the OML 18 asset, comprising a new pipeline from OML 18 and a floating storage and offloading vessel.

WATCH: San Leon Energy's Oisin Fanning discusses US$15mln investment in Energy Link Infrastructure

Once commissioned, the system is expected to reduce the downtime and allocated pipeline losses currently associated with the Nembe Creek Trunk Line to below 10%. In addition, it is anticipated that the floating storage vessel will improve overall well uptime.

The investment comprises a 10% equity interest in Energy Link Infrastructure together with a US$15mln shareholder loan at a coupon of 14% per annum over four years, and repayable quarterly following a one-year moratorium from the date of investment.

A positive for SLE

We see this deal as very positive for SLE, said broker Fox Davies.

"At no cost it secures SLE some control of the midstream export route (one Board seat at ELI), which is crucial for the full monetisation of the upstream asset, and a 10% share of future crude transportation profits which we estimate to be worth US$35mln or 6p per SLE share." 

Fox Davies increased its price target to 45p from 40p previously, and its NAV estimate to 53p from 47p.

"This deal demonstrates the ability of SLE to take advantage of very accretive opportunities and should provide added comfort to investors," it added.

Shares rose 6% to 23.9p.

-- adds comment, share price --

 

Quick facts: San Leon Energy PLC

Price: 22.2 GBX

AIM:SLE
Market: AIM
Market Cap: £99.88 m
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on 19/10/20

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