San Leon Energy increases support for the new pipeline export route for OML 18.
San Leon Energy increases support for the new pipeline export route for OML 18.
The new ACOES pipeline is seen to be critical to the success of the OML18 production operations.
San Leon Energy PLC (AIM: SLE, AQSE: SLE, OTC: SLGYF) has provided a further loan, US$2mln, to Energy Link Infrastructure (ELI)which is the owner of the ACOES project (Alternative Crude Oil Evacuation System) in Nigeria.
The London-listed firm will receive a 14% coupon per year on the loan over four years, repayable quarterly, and, at the same time will acquire additional existing shares in ELI representing 2% of the equity – taking its stake to 13.323%.
“We have long considered ELI and the new ACOES pipeline to be critical to the success of OML 18 and so it is pleasing to be able to provide this Loan to ELI to advance an important stage of that key project,” said chief executive Oisin Fanning.
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“The fact that we have been able to make this investment utilising cash received from our settlement in the legal proceedings with TAQA Offshore BV is particularly beneficial, both for our cash flows and for our risk profile, as we seek to progress our reverse takeover transaction.”
Altogether San Leon has so far lent US$17mln to ELI, at 14%, and the company noted that presently some US$6mln of repayment is so far due albeit it said it recognises that ELI’s development is critical to the success of OML 18 and ELI’s cash balances at this time are required to progress the overall ACOES project.
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“San Leon will continue to waive repayment instalments due on its loans until the ACOES project has been further progressed and outstanding instalments will continue to accrue interest at 14% per annum,” the company noted in a statement.
ACOES is being constructed to provide a dedicated oil export route from the OML 18 oil and gas block, in which San Leon is a major stakeholder.
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It will comprise a new pipeline from OML 18 and floating storage and offloading vessel (FSO).
The new system is expected to reduce downtime and pipeline losses currently associated with the existing route, the Nembe Creek Trunk Line. It is also expected that the FSO will enable improved overall well uptime at OML 18.
San Leon already has an open agreement allowing it to acquire a further 4.302% of ELI in the future for US$6mln, this investment could be offset by payments owed under the loan agreements, though San Leon has so far not exercised this term of the arrangement.
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