London-listed oil firm Zenith Energy has reached an agreement to provide a secured loan facility to Anglo African Oil & Gas (AAOG) for a total amount of £250,000 ($327,400).
Zenith said on Monday that the purpose of the facility was to assist AAOG in addressing its immediate working capital requirements following the signing of a conditional share purchase agreement for Zenith’s acquisition of an 80 percent interest in AAOG’s subsidiary in the Republic of the Congo, AAOG Congo.
This was Zenith Energy’s first African acquisition. Through the purchase of a stake in AAOG Congo, Zenith is acquiring a highly prospective oil production and development asset – the Tilapia oilfield.
AAOG Congo has a 56 percent majority interest in and is the operator of the Tilapia oilfield in the Republic of the Congo. The remaining 44 percent is held by the national oil company, Société Nationale des Pétroles du Congo (SNPC).
The license is situated 1.8km offshore and entered into production in 2008. Having been drilled from onshore, there is no requirement for offshore drilling equipment. Oil storage and processing facilities are a 45-minute drive from Point Noire and 17km from the nearest refinery.
AAOG Congo currently produces approximately 30 barrels of oil per day, however, successful recent drilling carried during 2018 and 2019 has identified multiple potential productive reservoirs within the license.
Zenith also said that the facility would be available, inter alia, subject to AAOG shareholder approval of the conditional SPA announced on December 27, 2019, on January 25, 2020, regardless of whether all the conditions for completion of the acquisition have taken place.
The facility will run for an initial period of six months from January 25, 2020, and may be extended by further three months if completion of the acquisition (which following the approval the General Meeting would be conditional, inter alia, upon ministerial consent in the Republic of Congo) has not occurred.
It will be repayable at any time by AAOG with no early repayment penalties and will have an interest rate of 5 percent per annum which will be payable on final repayment.
Zenith will set off sums payable by it to AAOG pursuant to the SPA against the facility, which means the facility is essentially an advance on sums payable by Zenith to AAOG pursuant to the SPA. The facility will be secured on the shares in AAOG Congo.
Andrea Cattaneo, Chief Executive Officer, commented: “We have a bona fide intention to assist AAOG and its shareholders. As announced on December 27, 2019, we believe the Tilapia asset has potentially transformational productivity and we look forward to completing the deal in order to begin preparations for drilling activities in TLP-103C as soon as we assume operational control of the asset.
“Indeed, I am pleased to state that we have received initial indications, which shall require further confirmation in due course, that a suitable drilling rig may shortly become available in a neighbouring country.”
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