n the development phase, we envisage an innovative funding arrangement similar to the Petrofac-Bowleven deal on Bowleven’s Etinde field in Cameroon, before the Lukoil/Newage farm-out. PFC agreed to finance all Bowleven’s net development capex, in exchange for a high share (80%) of Bowleven’s cost oil entitlement until 130% of the amount invested has been repaid, then a small proportion (3-10%) of its profit oil entitlement depending on a “money multiple” of c 2.1-2.3x, subject to Petrofac achieving a minimum 20% IRR. On our calculations, this funding structure allowed Bowleven to retain 82-86% of the net project NPV without having to put up any development capital upfront – overall a decent outcome for both Bowleven and its contractor Petrofac.
We highlight that the contractor funding model is probably not yet applicable to Petromanas’s situation. Its Albanian assets are still in the exploration and appraisal phase rather than the post-appraisal pre-FID stage, and are therefore more higher risk from the contractor’s viewpoint.
Blvn is just the biggest disappointment, what more can you say... What I find amazing is how much better we are off than 12 months ago and yet we are moving along in this trough, its been months since we had a good positive day..
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