Decklar Resources, has confirmed closing of a US$20 million debt finance facility from Shell Western Supply and Trading Limited, Shell, a crude oil and petroleum product subsidiary of Shell plc., for the continued development of the Oza Oil Field in Nigeria.
Decklar and its co-venturer Millenium Oil & Gas Company Limited further announced the execution of the debt finance facility with Shell for the field development which has a tenure of five years.
Upon meeting certain outstanding conditions precedent to drawdown for the Development Debt, the Development Debt will be disbursed in three tranches based on development drilling activities on the Oza Oil Field.
Proceeds of the Development Debt will be used to fund development activities on the Oza Oil Field, including the re-entry of existing wells, drilling of new wells, and related infrastructure.
The new development wells are anticipated to have dual-zone completions with two oil producing zones simultaneously using two individual tubing strings. The full field development plan for the Oza Oil Field is anticipated to include the drilling of eight or nine new wells and the re-entry of two existing wells. As previously announced, Millenium’s historical debt has been restructured under similar terms to the Development Debt.
In accordance with the requirements of the Development Debt, Decklar has executed a facility agreement and an offtake agreement with Shell. The facility agreement in respect of the Development Debt includes a hedging program to allow for a put option hedging structure to manage exposure to fluctuations in the price of crude oil. It will be managed by Shell/Decklar/Millenium.
As recently announced, the Oza-1 well will be placed back on production once evacuation commences.
Sanmi Famuyide, CEO of Decklar Resources said “We are very pleased to announce the successful execution of the US$20 million debt financing with Shell, which is an important milestone for the Oza Oil Field development. The debt financing participation by Shell reflects a validation of Decklar’s plans for full development of the Oza Oil Field.”