(Alliance News) - Lekoil Ltd on Thursday said it has obtained funding from Qatar's sovereign wealth fund for appraisal drilling and initial development of the Ogo field offshore Nigeria.
Shares in the oil and gas exploration and production company were up 28% at 5.97 pence in London in late morning trading.
The Qatar Investment Authority will loan USD184.0 million to Lekoil in 5 tranches over a period of 11 months. The first drawdown is scheduled for February 2020, and the loan facility has a 7-year tenure from the date of first disbursement.
The loan is secured against, among other things, shares and assets of Lekoil subsidiary Lekoil 310 Ltd, as well as Mayfair Assets & Trust Ltd. It includes a moratorium on interest and repayment from the date of the facility until six months after commercial sale of production from the Ogo field begins.
The facility carries a 3.7% interest rate and has an upfront fee of 2.8% of the amount drawn under the facility. Lekoil must meet a number of ongoing covenants in order for the facility to remain in good standing.
Chief Executive Lekan Akinyanmi will pledge his entire 39.1 million holding of Lekoil shares as part of the facility's security package. He will receive a one-time fee of USD1.8 million offset against a USD1.7 million loan that was made to him in December 2014.
Further, in connection with securing the loan, Akinyami will be granted an award of up to 30.0 million new shares at no cost in five equal instalments provided the company's share price hits hurdles of 20 pence, 25p, 30p, 35p, and 40p by the seventh anniversary of the shares being awarded.
"Following the recent achievements of the OPL 310 license extension and the securing of funding for the appraisal drilling and development programme, we are delighted to have made strong progress, as promised, towards the start of the appraisal drilling programme on Ogo. We will continue to work closely with our partner and the Operator of the OPL 310 License, Optimum Petroleum, as we pursue value for our shareholders," said CEO Akinyanmi.
By Anna Farley; annafarley@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.