China’s Primeline Energy Holdings Inc. and its affiliate firm Primeline Petroleum Corp. (PPC) have found the cash to pay for its share of the costs for the development of an offshore gas field in China.
The formal documentation for the financing package was signed between the company and banks on Monday, November 17.
The financing will be provided by a syndicate jointly led by China Development Bank and China Export and Import Bank with Shanghai Pudong Development Bank as participant and agent bank. The principal amount of the facility is $274 million which will be repayable over 9 years at an all-in interest rate of 6 month LIBOR+4.7%.
China National Offshore Oil Corp (CNOOC) is the 51% owner and operator of the Development. Under agreements signed by CNOOC, Primeline and PPC in 2010, CNOOC has advanced all development costs to date. The loan facility has been put in place in order to finance the obligation of Primeline and PPC to repay their share of the development costs (collectively 49%) to CNOOC.
Lishui 36-1 gas field is located 150 kilometres away from Wenzhou city Zhejiang province, with an average water depth of approximately 84 meters. The gas field has 4 producing wells, and its primary production facilities include a comprehensive platform and a processing terminal.
According to Primeline, production from the Lishui 36-1, which started in July 2014, has progressed extremely well and has averaged 23.3mmcfpd since early September.
Once the loan has been transferred and CNOOC repaid, Primeline and PPC expect to receive a significant amount of income for their shares of the sales revenue which has been generated during the trial production period and which has been held by CNOOC for the account of Primeline and PPC pending repayment.