Kiishi-Lagos

FCMB, Stanbic IBTC Completes Financing for FHN's OML 26

 

FCMB Capital Markets Limited (“FCMB”) and Stanbic IBTC Bank Plc (“Stanbic IBTC”) have executed an up to US$230 million acquisition and development facility for First Hydrocarbon Nigeria Limited (“FHN”). The facility provided financing towards the acquisition of FHN’s recently concluded acquisition of a 45% interest in Oil Mining Lease 26 (“OML 26”) from the Shell Petroleum Development Company of Nigeria (“SPDC”) Joint Venture and provides the subsequent capital expenditure required to develop the block. The agreement follows the completion and signature of a Joint Operating Agreement between FHN and the Nigerian Petroleum Development Corporation (“NPDC”) to jointly develop OML 26.

This transaction marks a first for the Nigerian financing market – the first onshore Niger Delta Acquisition completed and financed wholly by Nigerian financial institutions, and the first uniquely structured Reserve Based Lending transaction executed in the banking market supported by complex commodity hedging instruments. Both FCMB and Stanbic IBTC Bank are proud to have delivered this transaction to FHN.

Speaking at the signing ceremony to conclude the facility FHN CEO Labi Ogunbiyi said: “I have been working in upstream oil and gas in Nigeria for over 10 years and it is particularly pleasing to see that the depth of local markets has developed to the extent that we can secure our full debt commitments from local lenders. It is a first for the sector and we are immensely proud that FCMB and Stanbic IBTC Bank have been able to work with such excellent professionalism and team work to create solutions and adapt to ensure that our facility was in place ahead of completion of our acquisition. FCMB and Stanbic IBTC Bank have been supportive partners of ours, since the idea of FHN was conceived and I would like to thank them for their support throughout this process. We look forward to working together to continue to develop the indigenous E&P industry over the coming years.”

Also speaking at the signing ceremony the Group Managing Director of FCMB Plc, Ladi Balogun said: “”We are pleased to have been able to play a leading role along with Stanbic IBTC Bank and Standard Bank in the realisation of FHN’s inaugural asset acquisition. As the oil industry goes through its reforms and transformation, it is critical that local players such as FHN can count on local banks with the requisite technical and financial capacity to support their aspirations. We congratulate FHN, NPDC and the Federal Government for their visionary and bold steps towards increasing local participation in the nation’s upstream oil industry.”

The Chief Executive Officer of Stanbic IBTC Bank, Mrs Sola David-Borha said at the signing ceremony, “This transaction represents a major milestone for the indigenous upstream sector and for the future of the industry in onshore Niger Delta in Nigeria. It also assists in driving the Federal Government of Nigeria’s target of achieving [70]% local content participation in the sector by [2012], and Stanbic IBTC Bank is proud to be associated with FHN and the NPDC in their continued efforts to develop the hydrocarbon sector of the economy through the development of OML 26”. 

FCMB and Stanbic IBTC Bank acted as the Joint Mandated Lead Arrangers, Bookrunners and Technical Banks to the US$230m facility, and  undertook the roles of Financial Modeling Bank and Documentation Bank; Standard Bank London Plc are the Lenders’ Agent while CSL Trustees will act as Security Trustee to the Lenders – Aluko & Oyebode provided legal counsel services to the Lenders. FCMB Capital Markets Limited also acted as Global Co-ordinators to the transaction.

First Hydrocarbon Nigeria Limited is an independent indigenous oil and gas exploration and production company. It was established in June 2009 with the objective of increasing indigenous involvement and ownership in the upstream sector of the oil and gas industry through the acquisition and development of substantial oil and gas assets in Nigeria, including the reactivation and enhanced production of fallow assets currently held by the major international oil companies. FHN is 45% owned by Afren Nigeria Holdings (Nigeria) Limited (wholly owned subsidiary of Afren Plc) and 55% owned by Nigerian institutions and individual investors.

OML 26 is located in onshore Niger Delta. It comprises two developed and producing fields, Ogini and Isoko. Crude export from the fields is at the Forcados terminal via a 29km pipeline to the SPDC JV operated Eriemu manifold.