Urals Energy Plc Regulatory News (UEN)

23 Jan 2007 07:01

Urals Energy Public Company Limited23 January 2007 FOR IMMEDIATE RELEASE: Urals Energy Public Company Limited $130 Million Dulisminskoye Field Development Debt Financing Urals Energy Public Company Limited announces today the completion of a new debtfinance facility to fund the development of the Dulisminskoye field in IrkutskOblast, Eastern Siberia. Goldman Sachs, as Arranger, and Standard Bank plc, asthe funding bank, are providing a total of US$ 130 million of debt to a specialpurpose subsidiary of Urals Energy. The debt facility is secured by OOO Dulisma("Dulisma") as a project-style loan that is non-recourse, except in certainlimited circumstances, to Urals Energy. This debt financing is expected to fundUrals Energy's commitment to develop the oil reserves at its Dulisminskoyefield. The terms of the loan arranged by Goldman Sachs include an interest rate of 725basis points over LIBOR of which 300 basis points are payable quarterly, withthe remainder accruing until the loan matures in four years or 2011 when allprincipal and accrued interest is due in a single payment. The loan may beprepaid at any time but during the first two years certain penalties for earlyprepayment apply. The credit risk of the debt facility will be sold to Goldman Sachs and StandardBank will act as the funding bank of record and also facility agent. The dealis structured to fund in two tranches, $45 million and $85 million. The secondtranche is subject only to the approval of Urals Energy's senior bank syndicatein accordance with the terms of a pre-negotiated inter-creditor agreement. The use of $130 million gross financing proceeds include approximately $30million to reimburse Urals Energy for planned development costs incurred atDulisma since its acquisition in June 2006, $20 million for the defeasance ofcash interest payments for the first two years of the facility, and theremainder, $80 million, for future capital and operating costs of Dulisma. This loan will provide Urals Energy with the debt capital necessary to developthe Dulisminskoye field to its projected peak production level of 30,000 BOPD by2011. Following certain favorable changes in the timing and route ofTransneft's ESPO pipeline, total development costs for Dulisminskoye have beenreduced, however, the project's near-term net cash requirement has increased asa result of the acceleration of certain elements of the development plan. It isexpected that the debt financing is sufficient to meet this revised net cashflow profile. Also announced separately today are two key approvals received by Urals Energyfrom the Russian Government for the successful development and operation of theDulisminskoye field. Urals Energy has received written confirmation from theIrkutsk Oblast Tax Administration that the Dulisminskoye field qualifies for aten year, zero production tax rate for the period beginning 1 January 2007 andending 31 December 2016.. Production taxes for Urals Energy's other Russian oilproduction operations averaged approximately $11.50 per barrel for the 11 monthperiod ending 30 November 2006. This confirmation by the Russian governmentthat no production taxes will be levied on oil produced at Dulisminskoye for thenext ten years results in gross savings of approximately $308 million and anincrease in the project PV 10% of approximately $191 million based on the 31March 2006 report by Urals Energy's independent reserve engineers, DeGolyer &MacNaughton. On 28 December 2006, Urals Energy received the final approval by the RussianGovernment's Central Committee for Field Development of Urals Energy's fielddevelopment plan for the Dulisminskoye field. This approval provides UralsEnergy with the full legal authority to proceed with the development of theDulisminskoye field. The combined result of this innovative debt financing, certification of zeroproduction tax rate for the next 10 years, official field development planapproval, and continued progress by Transneft in constructing the ESPO, nowprovides Urals Energy with a clear path for the successful development of theDulisminskoye field. William R. Thomas, CEO, commented: "We believe this to be a ground-breaking debt financing for the Russian E&Pindustry and are pleased that Goldman Sachs and Standard Bank have demonstratedtheir confidence in both our assets and management team with this unique projectdebt financing. Both the terms and speed of execution of this transaction wereattractive, providing Urals Energy and its shareholders with the best debtfacility available for financing the development of the Dulisminskoye field." 23 January 2006 Pelham PRJames Henderson 020 7743 6673Gavin Davis 020 7743 6677 This information is provided by RNS The company news service from the London Stock Exchange