PetroNeft Resources, an oil and gas company with concessions in Russia, is to team up again with privately-owned Eastern European energy firm Arawak Energy, while at the same time tapping it for a loan.
The $15m loan is secured on PetroNeft's 50% interest in licence 67 in the Tomsk Region of Western Siberia, and will be repayable in one lump sum at the end of the three-year loan period in May 2015.
The interest payable under the loan will be six percentage points above the London inter-bank offered rate (LIBOR - the inter-bank lending rate), which PetroNeft was keen to emphasise is a competitive rate given present market conditions. Under the terms of the loan PetroNeft also granted Arawak 4,000,000 warrants over shares at a strike price of $0.1345 per share.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
PetroNeft's existing $30m facility with Macquarie Bank remains in place and Macquarie has granted permission under the terms of their facility for this additional debt facility with Arawak.
Under the new area of interest agreement, the two companies will continue to jointly pursue new opportunities in Western Siberia, building on the success of the previous collaboration agreement that ran for three years to August 2011. Under the previous area of mutual interest (AMI) agreement, Arawak opted to take a 50% interest in Licence 67 which was acquired by PetroNeft in January 2010.
Licence 67 covers the Arbuzovskoye Pilot Development Programme, where production is set to begin in the third quarter of 2012, and the Lineynoye Field Development Programme, where production remains stable at 2,200 barrels of oil per day.
Dennis Francis, Chief Executive Officer, said: "We are delighted to conclude a new financing arrangement and AMI agreement with Arawak Energy and look forward to continuing our fruitful partnership in the coming years. We will now focus on developing Arbuzovskoye and seek to build on our existing production profile and positive cash flows throughout the remainder of the year."
One-year savings accounts beat the Bank of England’s base rate - should you fix your cash?
Several savings providers have upped their one-year rates meaning you can now earn more than the bank rate for the first time in over a month. Is now a good time to fix?
By Vaishali Varu Published
How likely are Spring Budget tax cuts? What the economists say
Chancellor Jeremy Hunt is expected to announce some tax cuts in the Spring Budget. But analysts warn they may come at a price for the UK
By Henry Sandercock Published