PGNiG Upstream International AS (PUI), a subsidiary of PGNiG SA, executed a $400 million credit facility agreement with eight banks. The company said that the primary use of proceeds from the facility will be early payment of some of its outstanding debt, including the entire debt contracted to finance acquisition of assets from Total E&P Norge in 2014.
According to PUI, the Banks involved in the contract are Societe Generale, BNP Paribas, ING, HSBC, Citibank, CACIB, SEB, and Natixis. The facility is a seven-year revolving loan with a grace period of 30 months. The company said it will be one of the key components of its financing in the coming years.
“It will provide PUI with flexibility in planning its exploration and production activities, and will enable the company to freely purchase other production assets on the Norwegian Continental Shelf,” the company has said in today’s press release.
Furthermore, the funding will also support the development plans for the two new oil and gas fields − Gina Krog and Snadd.
As said in the press release, the Reserve Based Loan formula of the facility gives PUI substantial financial independence and prevents its operations from weighing down directly on PGNiG’s business in Poland, as the facility will be secured on Norwegian assets. It will generate substantial savings in the Group’s finance costs.
The company said that, in August 2015, it will repay approximately PLN 1.3bn to PGNiG. The amount will include PLN 400m under bridge financing provided to PUI in connection with the acquisition of Total’s assets, as well as early payment of other intra-Group borrowings. The company added that from PGNiG’s perspective, such early payment will significantly shorten the payback period of its Norwegian venture. Also, it is estimated that by 2017 the aggregate transfer of funds from Norway to Poland will exceed the nominal value of the investment in the Norwegian company.
At present, PGNiG Upstream International holds 15 licences on the Norwegian Continental Shelf.