Oilexco Enters into Pre-development Credit Facility
Oilexco Inc. said that The Royal Bank of Scotland plc has agreed to provide a £40 million (~US$78 million) subordinated pre-development facility to Oilexco North Sea Limited as a supplement to its current credit facility.
Arthur Millholland, President of Oilexco, said: "Consistent with our philosophy of funding development expenses with bank debt, we intend to apply these funds to the development of our recently announced Shelley discovery and other development projects. This subordinated facility allows the Company the opportunity to finance expenditures incurred in advance of filing a Field Development Plan, such as ordering long lead time equipment. The Royal Bank of Scotland has again paved the way to rapid development of oil production in the North Sea in creating this innovative financing vehicle for Oilexco."
The credit facility agreement is conditional upon the consent of the syndicate of Banks which have advanced the existing Senior US$275 million and Junior US$20million secured Brenda/Nicol Development Facilities, and other usual terms and conditions of draw down. The required consent of the Senior and Junior Facility Syndicates has been requested and is expected to be received on or before February 23, 2007. While the Syndicates have verbally indicated their support for the arrangements, until their final approval has been received, no assurances can be given that such consent will be forthcoming or that the other terms and conditions of draw-down will be met.
The proposed subordinated predevelopment facility has an initial term to January 31, 2008. Oilexco has agreed to issue a share purchase warrant to a subsidiary of the Royal Bank of Scotland to satisfy a portion of the fees payable. The terms of the warrant will entitle the holder to acquire up to 500,000 shares of Oilexco at a strike price of £3.75 per share within 2 years of issue.
Steve Mills, Head of the London Oil and Gas team at the Royal Bank of Scotland said:
"Once again RBS is very pleased to support Oilexco with a facility which meets their needs as they move onto the next stage of their growth. In the current tight market for equipment, close cooperation between Oilexco and RBS has enabled us to structure a solution which enables Oilexco's 2007 development projects to move closer to production."
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