Oilexco Engages Royal Bank of Scotland for Debt Financing

Oilexco Brenda Block
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Oilexco Incorporated has engaged The Royal Bank of Scotland as its exclusive arranger of debt financing for the development of the Brenda oil field in the North Sea. The Engagement Agreement contemplates a Project Facility of Pounds Sterling 75 to Pounds Sterling 100 million (approximately $172 to $230 million Canadian dollars) for a period of up to 5 years for the purposes of developing the Brenda Field, refinancing part of the previous development costs on the Brenda field and the acquisition costs of Oilexco's interests in the Balmoral field and associated floating production facility. The Royal Bank of Scotland and Oilexco have agreed to a term sheet for a bridge facility of Pounds Sterling 10million (approximately $23 million Canadian Dollars) for a period of up to 364 days as part of the overall Project Facility. RBS will also provide a number of advisory services to Oilexco under the Engagement Agreement including project and risk analysis and use of a North Sea financial model developed by RBS.

At this time, there is no offer or commitment by RBS to extend or arrange either or both of the proposed facilities, and the terms and conditions of the proposed Project Facility have not been agreed. Any offer of financing will amongst other things be subject to the completion of satisfactory due diligence, internal approvals and various other conditions including the execution of satisfactory documentation.

Arthur Millholland, President of Oilexco, said, "As we proceed towards the development of the Brenda oil field, having access to the experience and advice of The Royal Bank of Scotland will be of great assistance to us. The Royal Bank of Scotland is the leading provider of debt for development in the North Sea. The bridge financing which is contemplated will allow us to get an early start on implementing our development plan, once we have received the required regulatory approvals. Project financing the development costs allows Oilexco to deploy its equity capital on further drilling opportunities. Our current development plan, which is subject to regulatory approval, contemplates oil flowing from the Brenda field in the second quarter of 2006."

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