Northern Petroleum Secures Project Finance Facility
Northern Petroleum reports that Standard Bank Plc has approved the terms of a project finance facility of up to Euro40 million with Northern's subsidiary NP Netherlands B.V. ('NPN') secured over the assets of NPN. Northern is acting as sponsor of the NPN facility and is providing a sponsor guarantee. The parties are now moving towards completion of the detailed facilities documentation.
Drawdown is subject to satisfying the terms of the facility, which are normal for this type of transaction. Up to Euro35 million will be made available to fund the capital cost (including a contingency for cost overruns) of bringing NPN's six onshore oil and gas properties in the Netherlands to production. A further Euro5m working capital facility will be made available once NPN has reached first production. The facility will have an initial duration of 60 months from first drawdown of funds, with repayments to commence six months after scheduled first production.
Upon signature of the facilities documentation, it has been agreed that Standard Bank will be issued with three million warrants at prices based upon trade weighted prices of Northern's shares at various times within the agreement process. Standard Bank has agreed not to sell the warrants, or the shares issued upon exercise of the warrants, until the earlier of 12 months after first scheduled production or 18 months from first drawing under the facility.
Chris Foss, Finance Director of Northern, stated:
'We are delighted that Standard Bank, who have a proven track record in advising and lending to the natural resources sector, has recognized the potential of NPN's development project in the Netherlands and has agreed to provide this facility. We look forward to working with them to bring NPN's oil and gas reserves into production as soon as possible.'
Armin Eckermann, Head of Financing - Resource Banking, of Standard Bank
'Looking at the oil, gas and electricity generation economics of the Netherlands, Standard Bank is more than comfortable in financing the project and is delighted to be engaged with Northern Petroleum Plc which was able to review and develop an oil, gas and electricity model in such a competitive Northern European market environment. This model can become a blueprint for the industry.'
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