Sirius Petroleum, the Nigeria-focused oil and gas development and production company, has signed a binding agreement for up to $20 million with Barak Fund SPC Limited, a credit fund focused on Africa.
Sirius said on Monday that the $20 million would contribute to the funding of the first phase of the Ororo field development, more precisely the Ororo-2 and Ororo-3 wells.
The company added that the debt facility could be drawn down in specified tranches following first production.
The facility will be deployed to pay for costs in relation to Ororo-2 well following first oil as well as Ororo-3, which are due to service providers under the staged milestone payments for the Ororo work program.
According to Sirius, the facility has a term of three years from the date of the first drawdown and is repayable in four equal $5 million installments if the facility is fully drawn, plus accrued interest in the last four quarters of the term of the loan.
Beginning from drawdown, interest is charged at three-month LIBOR plus 10% and is payable quarterly in arrears.
The facility may be canceled, and the outstanding amounts of the loans declared immediately due and payable by Barak upon, among other things, a change of control of Sirius or on the disposal of all or substantially all of the assets of Sirius’ group.
Sirius has given customary negative pledges, warranties, undertakings, events of default and indemnities to Barak. Sirius will grant Barak an all assets debenture and a security assignment of receivables by way of assignment of offtake contracts. Drawdown is conditional upon, among other things, the satisfaction of customary conditions precedent.
Bobo Kuti, CEO of Sirius, said: “We are delighted to have signed a facility agreement for up to $20 million of debt funding from Barak to support the development of the Ororo field and look forward to building a strong strategic partnership with such a high-quality investment management team.”
Jean Craven, CEO and co-founder of Barak, added: “The Sirius shallow offshore strategy is complementary to our investment philosophy where we back strong asset-based investments and the development of the associated infrastructure of the asset.”
It is worth reminding that the Ororo-2 well was expected to be spudded in the fourth quarter of 2018. However, the company stated on December 31, 2018, that this would not be the case as the Adriatic-1 jack-up rig, chosen for the drilling of the well, was completing the last of its pre-existing contracts with another operator before the start of the Sirius work program.