“The quality of the assets we are acquiring has allowed the company to attract the debt necessary to complete under better terms than other proposals,” said Ryan Gaffney, CFO
Canadian Overseas Petroleum Ltd () said it has inked a term sheet for US$65mln of debt financing that will facilitate its acquisition of US onshore producer Atomic Oil and Gas LLC.
The arrangement, for a senior credit facility, is with a US-based global investment firm. It will have a four-year duration and COPL described the terms as competitive whilst noting that it is subject to typical lending conditions.
It has a US$45mln base plus a further US$20mln accordion facility that can fund future development initiatives, at the discretion of the lender.
“Securing this credit facility term sheet is a key milestone as it means we will be fully funded and enables us to complete the Atomic acquisition,” said Ryan Gaffney, COPL chief financial officer in a statement.
“The quality of the assets we are acquiring has allowed the company to attract the debt necessary to complete under better terms than other proposals.”
Arthur Millholland, meanwhile, highlighted that the Atomic acquisition represents a ‘step change’ in the strategic growth opportunities open to COPL.
“We look forward to the completion of the Atomic acquisition which will be materially value enhancing to COPL, providing an immediate and growing revenue stream from day one.
“Crude oil prices have increased significantly since we entered into the transaction thus enhancing the overall value of the proposition. Working with our new colleagues we plan to accelerate the production profile from the Atomic assets,” the CEO said.
COPL said it expects the loan to close in the week of February 15.
The debt financing comes after a recent £6mln equity raise.
Atomic brings producing assets in the US state of Wyoming, the Barron Flats Shannon Unit (57.7% owned by Atomic) and Cole Creek Unit (66.7% owned by Atomic).
Barron Flats produces around 1,400 barrels per day (bpd), up from 200 bpd in 2017, and is forecast to reach a plateau rate of 5,000 bpd gross by 2022.
The Cole Creek asset, meanwhile, is forecast to have a 3,500 bpd plateau by 2026.
Significantly, the fields are at the front end of what’s expected to be a 40+ year operating life.
