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(Alliance News) - Canadian Overseas Petroleum Ltd on Friday said it has obtained a CAD200,000 loan from its chief executive in order to move forward with its OPL 226 project in offshore Nigeria.
Shares in Canadian Overseas Petroleum were up 37% at 0.13 pence in London in late morning trading.
The oil and gas exploration and development firm said it has entered into a promissory note with President & CEO Arthur Millholland.
The note's principal amount is CAD200,000, about GBP115,874, and it is repayable six months from the issue date of February 14. The note has a 10% per annum interest rate, which it bears in Canadian dollars.
While none of the interest or principal amount must be paid by the company before the maturity date, Canadian Overseas Petroleum can elect to pre-pay up the entire principal of the note before then.
The note is secured via a general security agreement over its personal property and guaranteed by Canadian Overseas Petroleum's subsidiaries.
Net proceeds of the loan will mostly go towards "development and financing plans for the OPL 226 project", though will also be used "for general working capital".
Millholland said: "This loan, which reflects my confidence in the company, will generate the necessary funds so we can conclude the additional financing measures needed to commence appraisal drilling of OPL 226 within our targeted timeframe of 2020.
"Together with our joint venture partner we continue to be focused on concluding the placement of the OPL 226 performance bond by our Nigerian affiliate and progressing the operational plan for the commencement of operations."
At present, Canadian Overseas Petroleum is in talks with strategic investors and global service providers as it seeks "to secure financing for the placement of the OPL 226 performance bond", as well as "for the provision of services for the early production scheme and other project financing costs".
The firm intends to drill the first OPL 226 appraisal well in 2020, provided it obtains the necessary financing and regulatory approvals. This would then be put into production via an extended well test using an early production system.
If all goes well with the first appraisal well, Canadian Overseas Petroleum would then drill another two or three "similar wells" and move to "a full field development plan".
By Anna Farley; annafarley@alliancenews.com
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