BPZ Resources, Inc. (NYSE: BPZ) announced that the company entered into a $75 million senior secured credit facility with a lending syndicate led by Credit Suisse AG Cayman Islands Branch.
Borrowings under the new facility are available for Block Z-1 and other commitments and expenses. Interest on the facility accrues at the London interbank rate (LIBOR) plus a margin of 9% per annum and is payable quarterly. The facility matures on July 7, 2014 with amortization of the loan to begin January 2013 based on a scheduled repayment plan. Also, the loan is subject to an agent fee based on the principal amount and the performance of the price of Brent crude oil, and is capped at a maximum fee.
The facility is secured by certain assets associated with the offshore Block Z-1, associated oil and gas production and revenues and has required debt reserve amounts. Under certain circumstances, the lender has optional and mandatory repayment features.
Click here for the news release.
OAG360 Comments:
The new credit facility gives BPZ the financial resources it needs to build oil production at its only producing field. The Corvina and Albacora fields located in offshore Block Z-1 have been producing, but the pace of drilling has been hampered by the imposition of new regulations and capital conservation. Having the credit facility in place gives BPZ the financial flexibility it needs to develop the Block Z-1 reserves in the most efficient manner.
Block Z-1 is a strategic asset for BPZ, as the two fields in the block (Corvina and Albacora) contain all of the company’s year-end 2010 proved reserves of 39 million barrels of oil (MMBO). Nearly 75% of BPZ’s proved reserves are associated with the Corvina field. Approximately 22 MMBO of proved undeveloped oil reserves (PUDs), consisting of 17 future wells, are located in the Corvina field. To convert the Corvina PUDs to producing assets, BPZ is building a second platform with 24 drill slots, which will be positioned over the identified oil pool in the field. After allowing for the required reinjection wells, up to 22 new oil wells could be drilled. In addition, the company estimates that probable reserves of 25 MMBO may also be accessible from the new platform. In addition, the Albacora field had 4.7 MMBO of PUD reserves at year-end 2010 and probable reserves of 10.1 MMBO may also be accessible from the existing platform. The $72 million credit facility in addition to cash flow from existing production should supply adequate liquidity for the company to fund its $50 million 2011 capital investment plan and continue its growth strategy into 2012.
The next step in Block Z-1 development is securing a permit for conducting 3-D seismic data to identify the best drilling locations.
