PetroNeft Resources plc, owner and operator of Licence 61, Tomsk Oblast, Russian Federation, has entered into a mandate agreement with Standard Bank plc for a US$80 million debt facility to finance PetroNeft's development activities within Licence 61.
The funds will initially be applied to the development of the Lineynoye and West Lineynoye oil fields, including pipeline construction, field infrastructure and initial production drilling necessary to achieve first oil production in 2009. Longer term, and subject to appropriate technical and credit approvals, the facility may also be used to fund subsequent developments of discoveries in Licence 61, such as the Tungolskoye oil field and recently announced Korchegskaya discovery.
The facility, which remains subject inter alia to final documentation and credit approval by Standard Bank, is structured as a Development Loan that converts into a Reserved Based Lending Facility. The drawdown potential under the facility, which is for an initial period of four years, will be based on the value of approved development and producing assets. Upon approval by Standard Bank, the facility may also be applied to undertake suitable acquisitions.
Standard Bank has also agreed to provide treasury management and hedging arrangements to assist PetroNeft in managing its foreign currency and interest rate exposures.
"We are delighted to announce this mandate agreement with Standard Bank. This is a major milestone on the road to PetroNeft's objective of achieving production in 2009 and building a long term oil and gas business in Russia. We look forward to a long and fruitful relationship with the team at Standard Bank," said PetroNeft CEO Dennis Francis.
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