21st Mar 2007 07:02
Afren PLC21 March 2007 Afren plc (AIM: AFR) US$200 million Debt Facility Secured for the Okoro Setu Project and Equity Investment London, 21 March 2007 - Afren plc ("Afren" or the "Company") announces thesigning of a fully underwritten US$200 million debt facility to finance thedevelopment of the Okoro Setu project, in addition to an equity investment bythe Mandated Lead Arranger and a Lead Syndicate Bank. The Board of Afren is delighted to announce that BNP Paribas - as Mandated LeadArranger ("MLA") - has executed and underwritten a US$200 million debt facilityagreement and, together with Standard Bank Plc, BNP Paribas has subscribed to aUS$15 million equity investment in the Company. US$200 million Debt Facility The Company has secured a US$200 million, 5-year Senior Secured RevolvingReducing Credit Facility (the "Facility"), which will primarily be used tofinance the development of the Okoro Setu Project (the "Project"), which Afrenand its JV partner Amni International Petroleum Development Company ("AMNI")successfully appraised in Q3 2006. The Facility is fully underwritten by BNPParibas as Mandated Lead Arranger and has been secured against the Okoro SetuProject reserves. As part of the financing due diligence process, anindependent assessment of the reserves of the Project has been completed byNetherland, Sewell and Associates, Inc ("NSAI"). BNP Paribas is currentlysyndicating the Facility among a group of international banks. Equity Investment As a further demonstration of confidence in Afren and the Okoro Setu Project,BNP Paribas and Standard Bank are investing US$5 million and US$10 millionequity respectively in the Company. Subscription Agreements were entered intoon 20 March 2007 for 13,523,711 shares ranking pari passu in all respects withall other issued Ordinary Shares in the capital of the Company at 57.0 pence.Application for admission has been made for the shares, which is expected to beeffective on 26 March 2007. Following the equity investment, the Company'soutstanding issued share capital will be 205,063,207 shares. Okoro Setu Project update Afren announced the Production Sharing and Technical Services Agreement withAMNI in June 2006 to appraise and develop the Okoro and Setu oil discoverieslocated in OML 112 in the shallow waters of the eastern Niger Delta. Within six months of announcing the agreement, Afren as Technical ServiceProvider, successfully drilled two appraisal wells, Okoro-3 and Okoro-3STbetween September and December 2006. The wells were drilled on time and onbudget. The successful results of the appraisal programme fulfilled allpre-drill objectives and have significantly delineated the development. The independent reserves audit completed by NSAI - prior to any reservoirmodelling studies - estimates 1P oil reserves of 25 mmbbls for the Okoro andSetu Fields and a 2P reserve level of 32 mmbbls. The Field Development Plan for the initial development of the Okoro Field, whichwas recently submitted to the Department of Petroleum Resources in Nigeria isexpected to be approved shortly. Development drilling will commence in Q3 2007using Global Santa Fe's Adriatic VI drilling unit. In the base case scenario,up to 6 deviated/horizontal gravel packed oil production wells will be drilledfrom a single field location and supported by a minimum facilities well headplatform. Oil will be transported by pipeline to a leased Floating ProductionStorage and Offloading vessel ("FPSO"), moored 1 km south of the field, forprocessing. Afren is in advanced stage discussions to secure the FPSO, whichwill be contracted for an initial five-year term. The unit will process thetotal well fluids, producing stabilised crude for storage in the FPSO, withsubsequent regular offtake by tanker. Associated gas produced will be utilisedas fuel for the vessel's power generation and as lift gas to assist wellproductivity. The drilling and completion sequence will be optimised so that production willbe built up progressively. Target for first oil is on schedule with peakproduction expected to reach 15,000 to 20,000 bopd by early 2008, when all theplanned production wells are completed. Most major contracts and materialspurchase orders are in place to support this overall target for first oil. Osman Shahenshah, Chief Executive of Afren, commented: "I am very pleased to announce that Afren has secured a fully underwrittenUS$200 million debt facility from BNP Paribas for the development of the OkoroSetu Project. Of particular significance is the fact that the Banks are supporting Afren onboth the debt and equity elements of the capital structure, which is a clearsign of confidence in Afren. Securing the fully underwritten debt facility is an important milestone inAfren's next phase of growth and the Company is on target for 15,000 - 20,000bopd by early 2008." Olivier Serra, Managing Director of BNP Paribas' Reserve Based Lending Group,commented: "This Financing represents BNP Paribas' largest reserve based lending facilityfor an independent oil company entered into for the development of an asset thatis not producing and marks a significant achievement for Afren. This togetherwith the bank's equity investment underscores our confidence in Afren and theOkoro Setu Project. Afren has the asset base and set-up to become one of the leaders of the nextgeneration of Africa-oriented independent oil and gas companies. Its team oftalented and experienced managers and board members is well respected and highlyregarded in the oil and gas industry, and throughout the African continent." Erik Jorgensen, Director and Head of Standard Bank's Oil & Gas Team, commented: "We are delighted to be involved with Afren, a company which we view as a keyindependent oil and gas player in the Gulf of Guinea." Enquiries: Afren plc +44 20 7182 1800Osman Shahenshah Chief ExecutiveEvert Jan Mulder Chief Operating OfficerGalib Virani Investor Relations Jefferies International Limited +44 20 7618 3500Toby HaywardJack Pryde Tristone Capital Limited +44 20 7399 2480Simon Ashby-RuddMajid Shafiq Pelham Public Relations +44 20 7743 6673James HendersonAlisdair Haythornthwaite Background information Afren (www.afren.com) was founded in December 2004 by a management teamincluding Dr Rilwanu Lukman, Chairman, and Osman Shahenshah, Chief Executive,with the vision to become the premier pan African independent Exploration andProduction company. Since its listing on the AIM market of the London StockExchange, Afren has rapidly expanded its portfolio and the management team hasdelivered nine assets in the Joint Development Zone of Nigeria Sao Tome andPrincipe, Nigeria, Gabon, Angola and Congo Brazzaville. Afren will continue to add to its diversified portfolio of near term developmentand high impact exploration with the overall objective of creating substantialshareholder value. Note In accordance with the AIM Rules, the drilling update information in this reporthas been reviewed and signed off by Dr Nick Johnson, who is Head of Explorationand Production at Afren Plc and has over 25 years relevant experience within thesector. He consents to the information in the form and context in which itappears. The Company estimates its reserves in accordance with the guidelinesand definitions of the Society of Petroleum Engineers / World Petroleum Congress("SPE/WPC") reserves classification (March 1997) using accepted engineeringprinciples. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AFR.L