Erin Energy gets $100 million loan to fund offshore Nigeria drilling

By Wendy Van Sickle

Columbus, Ohio, Feb. 9 – Erin Energy Corp. and subsidiary Erin Petroleum Nigeria Ltd. entered into a $100 million pre-export finance facility agreement with Mauritius Commercial Bank Ltd. as mandated lead arranger, agent, original lender and issuing bank on Monday, according to an 8-K filing with the Securities and Exchange Commission.

Erin Petroleum Nigeria may draw loans or letters of credit under the finance facility until June 30 after which the balance of Mauritius’ commitment may be deposited into a capital expenditure reserve account for payment of invoices expected to be payable within six months.

The finance facility has a sculpted amortization schedule beginning on June 30 and ending at maturity on Dec. 31, 2019.

Borrowings will bear interest at Libor plus 600 basis points.

The borrower must comply with a minimum debt service cover ratio of 1.2 times and a minimum ratio of projected gross revenues less projected gross expenditures plus the amounts held in certain bank accounts to all amounts outstanding under the finance facility less amounts in the debt service reserve account of 1.2 times.

The finance facility is guaranteed by Standard Bank of South Africa Ltd.

As a condition precedent to the initial drawdown on the finance facility, Erin Petroleum Nigeria entered into an exclusive off-take contract with Glencore Energy UK Ltd. dated Jan. 18 for Erin Petroleum Nigeria’s entire volumes of oil produced from Oil Mining Leases 120 and 121 offshore Nigeria.

Proceeds of the finance facility will fund Erin Petroleum Nigeria’s planned drilling of the Oyo-9 well offshore Nigeria.

Erin Petroleum Nigeria must comply with the terms of the off-take contract, ensure payments and deliveries of oil, notify Mauritius of any failures under the contract and ensure that it receives a fair market price for delivered oil.

Based in Houston, Erin Energy is an explorer, developer and producer of oil and gas.

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