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Byron Acquires Funds for Construction of Production Platform at SM58

Source: www.gulfoilandgas.com 12/4/2019, Location: North America

Byron Energy has signed a binding Secured Promissory Note with Crimson Midstream Operating, a portfolio company of The Carlyle Group, to borrow an initial amount of US$15.0 million. The first tranche of US$10.0 million under Promissory Note facility has been drawn by the Byron group.

As announced to the ASX on 6 November 2019, the funds from the Promissory Note will be utilised primarily for the ongoing construction of the production platform and pipelines at Byron’s wholly owned SM 58 field, following the substantial hydrocarbon accumulation discovered by the drilling of SM58 G1 well (formerly SM58 011 well) as outlined in the Company’s recent ASX reports. The funds can also be used for completion of SM58 G1 well and specified activity on the Byron operated SM71 project.

Key terms of the Promissory Note include:-
- Amount US$15 million;
- Senior Secured debt over the Company’s SM71 & SM58 assets and guaranteed by the Company;
- Interest rate of 15% p.a., over a 3-year term, with a first-year interest-only arrangement and no transaction fees;
- Principal and interest payable via a fee on production under the Promissory Note, based on monthly throughput of Byron’s oil production;
- An oil hedging program on approx. 50% of Byron’s net SM71 existing proved producing forecast production, with the first of a multi staged hedge in place on300 barrels ('bbls') of oil per day (net to Byron) over the 3 year term of the loan beginning 1Q/2020 implemented though a hedging counterparty, at a preferred customer rate, at fixed price of $US52.20 per bbl net of hedge costs, plus the WTI/LLS Differential, plus or minus applicable quality and transportation adjustments; and
- A Dedication and Transportation Services Agreement which provides for a rate significantly lower than that paid by “uncommitted” shippers and production sourced from any of Byron’s seven SM 73 field area blocks will receive the same discounted rate.

Crimson Midstream is a provider of crude oil transportation and storage services in California, Louisiana and offshore Gulf of Mexico. Crimson safely and reliably operates more than 2,000 miles of pipeline transporting approx. 400,000 barrels of crude oil per day to end-users.

Maynard Smith, Byron’s CEO, had this to say regarding the Promissory Note:
'We are pleased to have closed the issue of the promissory note to Crimson Midstream, a portfolio company of The Carlyle Group which is one of the world's leading investment firms. The funds from the issue of this promissory note combined with our recent equity raising will enable Byron to accelerate development of our exciting SM58 project. Theinitial US$15.0 million borrowing from Crimson can be potentially expanded substantially, based on production performance. This is the start of what I am sure will be a long and mutually rewarding relationship with Crimson.'

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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