Victoria Oil & Gas Plc, the integrated natural gas producing utility, is pleased to announce that its wholly-owned subsidiary Gaz du Cameroun S.A. ("GDC") has agreed a US$26m debt facility to support its production expansion at Logbaba through 2016 and 2017. The facility has been secured with BGFIBank Cameroon S.A. ("BGFIBank"). VOG aims to avoid recourse to equity markets, whilst ensuring gearing is restricted to appropriate levels as the Company continues to build value.
During 2016 VOG intends to increase gas production from the Logbaba Project by 30%, following the 107% increase in average daily production achieved in calendar year 2015. To meet the Cameroon market's demand for gas, key elements of GDC's expansion programme are:
· Drill 1 twin well and 1 step out well at the Logbaba plant site with the objective of increasing production reserves.
· Extend the Bonaberi pipeline to customers with gas service agreements in place.
· Increase gas processing plant capacity in three phases to handle expected increased gas flow from wells.
It is the Company's objective to fund the Logbaba development through operating revenues and capital contributions from GDC and RSM Production Corporation, our 40% partner. The facility announced today provides more than sufficient financing for GDC to fund its share of the production expansion programme.
Debt Facility
GDC has a well-established banking relationship with BGFIBank, and this new facility extends the existing loan of $4.4m. The debt facility agreed with BGFIBank by GDC is for a total of XAF 15 billion (approx. US$26 million), with the main material terms being:
· Repayment period of five years.
· Facility is available for draw down over a 12 month period that can be extended without penalty for a further 12 months.
· Interest on the debt is 7.15% per annum.
· Secured by a pledge over certain receivables and a letter of comfort from the Company.
· No further financial covenants.
Ahmet Dik, Chief Executive Officer of GDC, said: "This is a very important step forward for the Company. Once again, BGFIBank is providing us with flexible debt to help build our business in Cameroon. We have a highly effective working relationship with BGFIBank, and we continue to benefit from its high level of professionalism and capacity to deliver solutions appropriate to our needs. The 2016-17 production expansion programme for GDC has been carefully planned and we are committed to delivering increased levels of gas to customers within budget and without the Company having recourse to equity markets."
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