The African Export-Import Bank (Afreximbank) has been identified as the funding source of the $783 million acquisition of Nigerian Agip Oil Company Limited (NAOC) by Oando Petroleum and Natural Gas Company Limited.
The multilateral lender provided a senior $500 million and a junior $150 million reserve-based lending facility to Oando for the acquisition.
According to Investopedia, reserve-based lending is a type of financing for independent exploration and production companies in which the value of oil and gas reserves determines the quantity of a lending facility accessible to the borrower.
Naomisophyblog had reported that Oando completed the acquisition of Italian oil major, Eni’s 100 percent shareholding interest in NAOC for $783 million.
However, the funding source for the deal was not made public.
In a statement on Friday, Afreximbank said the facility was used to finance Oando’s acquisition of the 20 percent participating interest held by NAOC in the NNPC Exploration & Production Limited (NEPL)/NAOC/Oando joint venture (JV).
The multilateral lender said the joint venture with significant oil and gas assets, including oil mining leases 60, 61, 62, and 63 has produced 4.4 billion barrels of oil and 12 trillion cubic feet of natural gas to date.
Afreximbank said the JV still has reserves of 1.2 billion barrels of oil and 10.7 trillion cubic feet of natural gas.
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The statement read: “Afreximbank, retained as mandated lead arranger for the transaction, also served as bookrunner, coordinator, underwriter, escrow agent, facility agent, and security trustee, and also participated and underwrote US$350 million of the facility.”
Afreximbank also revealed that Indorama Eleme Petrochemicals Limited and Mercuria Energy Group also participated in the deal with $150 million each.
“Oando expects the acquisition to significantly enhance its production capacity from the current 20,000 barrels of oil equivalent per day (kboe/day) to 60,000 kboe/day, effectively boosting Nigeria’s oil output and reinforcing the country’s position in the global energy market,” the statement added.
By: Babajide Okeowo
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