A consortium of seven local and international lenders has signed an agreement to refinance Neconde Energy Limited’s existing Senior Secured Medium-Term Loan Facility Agreement worth $640 million, following a 20-year renewal of its Oil Mining Licence (OML), effective June 2019.
Neconde is in a Joint Venture (JV) with the Nigerian Petroleum Development Company (NPDC) in OML 42. The JV’s Production presently stands at an average of 50,000 barrels per day (bpd), and upon completion of the development activities planned in the 2019 work programme; output is expected to hit about 100,000bpd.
The consortium of seven lenders is made up of four Nigerian banks and three international lenders. They include Access Bank, Fidelity Bank, Zenith Bank as well as First Bank (UK) Limited. The international lenders are the Africa Import Export Bank (Afrexim), Africa Finance Corporation (AFC), and Glencore Energy (UK) Limited.
Apart from being a member of the lending consortium, Glencore is also the off-taker of Neconde’s equity crude oil production.
With the refinancing, Neconde, according to a statement from the firm, is now positioned to achieve its field development plans for the Asset.
The Chairman of Neconde Energy Limited, Dr. Ernest Azudialu-Obiejesi, said in a statement that the loan refinancing affirms the company’s strong financial fundamentals as a leading player in the upstream oil and gas industry.
He also disclosed that “this restructuring frees up capital for Neconde to invest in more development activities that will result in production increase.”
In the third quarter (Q3) 2018, Neconde alongside its JV partner, NPDC, secured a robust and independent alternative crude evacuation system. This initiative was borne out of the need to find a more reliable alternative to the Trans-Forcados Pipeline, which is prone to repeated outages.
The new evacuation system (“barging”) has become the primary evacuation system for the JV, and has since proven to be a more reliable and consistent channel of evacuating its crude oil for export. The JV intends to consolidate on this major achievement and improve its cash flow from the asset.
In January 2011, Neconde participated in and emerged successful in the competitive bid for the acquisition of 45% stake in OML 42 previously held by a consortium of International Oil Companies (Shell, Total Exploration and Production Nigeria Limited, and Nigerian Agip Oil Company Limited).