TIDMNUOG
RNS Number : 2534U
Nu-Oil and Gas PLC
28 March 2019
28 March 2019
Nu-Oil and Gas plc
("Nu-Oil" or "the Company")
Marginal Field Development Company signs non-binding Letter of
Intent ("LOI") to establish a gas to wire project financing
entity
Nu-Oil is pleased to note the following announcement from
Marginal Field Development Company Ltd. ("MFDevCo"), the Company's
50%-owned joint venture ("JV"). The key points are summarised
below:
-- MFDevCo and Marnavi Offshore ("Marnavi") (together the
"Parties") intend to establish a Special Purpose Vehicle ("SPV") to
finance gas-to-wire projects that MFDevCo develops;
-- This follows the strategic collaboration agreement entered
into with Marnavi as announced on 25 January 2019;
-- MFDevCo will hold 30% equity stake in the SPV which cannot be
diluted; the remaining 70% will be held by Marnavi, and other
investor(s) if sought;
-- The proposed SPV will enable the delivery of the marginal
field projects that MFDevCo identifies without dilution of Nu-Oil's
interest in MFDevCo;
-- MFDevCo and Marnavi will be represented on the Board of the SPV;
-- It is expected that Marnavi will have the primary
responsibility for day to day management of the SPV;
-- MFDevCo will be responsible for identifying and evaluating projects;
-- MFDevCo will offer investment ready projects, along with
commercially viable development plans, to the SPV, which will have
the right of first refusal;
-- The SPV will remunerate MFDevCo for any projects accepted;
-- In addition, the SPV will agree a contract with MFDevCo to
manage all and any projects accepted by the SPV; MFDevCo will
further contract its Consortium and Strategic Alliance Partners to
provide resources and technical expertise to develop projects
accepted by the SPV;
-- Marnavi and its associates (including Next Geosolutions) will
receive a similar commitment for the SPV for provision of their
services to the project;
-- MFDevCo and Marnavi are now working together to finalise
details of the structure and operation of the SPV.
Further to the agreement with Marnavi the Company notes
that:
-- MFDevCo has nominated Einar Antonsen, Non-Executive Director,
to be its representative on the SPV Board;
-- Einar will lead efforts, on MFDevCo's behalf, to raise
finance for the SPV which will be used to fund the acquisition and
development of gas to wire projects;
-- In addition, Einar is seeking additional financing for
MFDevCo to support the business as it concludes the terms of the
SPV with Marnavi and, in parallel, seeks to agree Heads of Terms
for the two GTW opportunities where efforts are being
concentrated;
-- Indicative offers of up to GBP500,000 for immediate funding
have been made, subject to the conclusion of the SPV;
-- Provision of seed capital to MFDevCo will reduce Nu-Oil's
general and administration overhead incurred through MFDevCo
related costs and staff utilisation.
Finally, the Company notes that MFDevCo is concentrating efforts
on the two priority GTW opportunities where discussions with
operators have advanced quickly so far. Efforts to establish the
SPV and Einar's appointment are designed to ensure financing is
available to conclude Heads of Terms. Negotiations between MFDevCo
and operators are ongoing, the Company will update the market with
further details if and when they reach a material conclusion.
Graham Scotton, Executive Chairman of Nu-Oil, commented, "I am
delighted by the progress made by MFDevCo management towards
securing gas to wire opportunities. The proposed SPV will be able
to raise financing required to sanction projects without diluting
the JV partners. As a result of the agreement, MFDevCo will be able
to cover working capital requirements while the SPV is being
established. I sincerely hope that efforts to conclude negotiations
are successful and look forward to supporting both parties to
achieve our strategic goals."
Marginal Field Development Company Announcement begins/
Marginal Field Development Company ("MFDevCo") is pleased to
announce that it has signed a non-binding Letter of Intent ("LOI")
with Marnavi Offshore ("Marnavi") to work together to establish a
Special Purpose Vehicle ("SPV"), in which MFDevCo and Marnavi will
be founding shareholders, to finance gas-to-wire ("GTW") projects.
This extends the collaboration agreement between MFDevCo and
Marnavi that was announced on 25 January 2019 and will provide a
key building block to allow MFDevCo to progress with the projects
on which it is currently in discussions.
As discussed in our announcement of 25 January, GTW offers
excellent opportunities to both extend the economic life of mature
fields and justify the development of smaller pools, by providing a
secure, lower cost export route, taking advantage where appropriate
of the expanding network of offshore wind infrastructure, and
facilitating lower opex. MFDevCo, with its lean structure, in-house
expertise and experience and the support of renowned international
equipment and service providers, is ideally placed to progress GTW
developments, benefitting existing licence holders and asset owners
(who can defer decommissioning and maximise economic recovery) and
contributing towards the energy security that is so critical to
governments.
The nature of GTW projects enables them to be 'packaged' as a
facility (including export route) and sales contract and financed
in a manner analogous to shipping financing, and the SPV that is
the subject of the LOI between MFDevCo and Marnavi is being
established to facilitate this. MFDevCo will continue its ongoing
project discussions and to identify and evaluate further
opportunities, and, under the terms of the LOI:
-- Will at its own expense, for viable projects, prepare a
development plan to justify the investment decision and agree a
Heads of Terms ('HoT') under which the SPV will acquire the
project.
-- Will receive a contract from the SPV to manage the project,
utilising Consortium members and partners as appropriate, under
agreed terms relevant to the project; Marnavi and its associates
(including Next Geosolutions) will receive a similar commitment for
the SPV for provision of their services to the project.
By virtue of its investment to date and work to 'incubate'
projects, MFDevCo will hold a 30% 'carried' interest in the SPV,
that will not be subject to dilution in future; the remaining 70%
will be held by Marnavi, who have the potential to farm down their
stake in future as other investors are sought. This structure
minimises the financing obligations on MFDevCo, whilst protecting
them against dilution, and offers Marnavi the potential to benefit
from favourable terms due to their 'early entry' and commitment.
MFDevCo and Marnavi are now working together to finalise details of
the structure and operation of the SPV and commence financing on
projects that are currently being specified.
Alison Pegram, Joint Managing Director of Nu-Oil and Managing
Director of MFDevCo, commented, "I am encouraged that asset owners
and partners alike see the value in MFDevCo's strategy and by the
progress that we have made in a relatively short timescale, which
is reinforced by this demonstration of Marnavi's further commitment
just two months after the original collaboration agreement was
signed. Demonstrating and securing access to appropriate financing
is obviously fundamental to our ability to progress projects and it
is crucial for our shareholders that this is achieved in a way that
minimises dilution and protects their rights and investment going
forward. We look forward to working more closely with Marnavi in
establishing the SPV and to advance the significant GTW
opportunities we are working to conclude."
Attilio Ievoli President of Marnavi Offshore, commented, "This
is an important step in commercialising the GTW projects that
MFDevCo are negotiating. We have been working together to develop a
financing model that incorporates Marnavi's experience and, by
doing that, we believe we will be able to attract investors,
minimise the dilution of MFDevCo shareholders and accelerate the
development of the 'project pipeline'. In the current environment
of energy security concerns, increasing demand for electricity and
pressure to maximise recovery of resources, we believe that
MFDevCo's strategy is timely and extremely well-positioned."
MFDevCo has nominated Einar Antonsen, Non-Executive Director, to
be its representative on the SPV Board. Former Partner at Fearnley
Securities, Einar has over 25 years' experience in corporate
finance, specialising in financial instruments and financial
engineering, working with both equity and debt capital markets. He
has extensive knowledge of offshore and shipping sectors, where he
has assisted clients with mergers and acquisitions.
Einar Antonsen commented: "I joined the Board of MFDevCo over 2
years ago because I recognised the value of marginal field
opportunities and believe that the company's business model is
unique in exploiting these vital assets. The financing model
proposed for the SPV completes the offering to operators. Based
upon my experience and preliminary discussions, I believe that gas
to wire projects offered by the SPV will be attractive to multiple
sources of finance. As specific gas to wire opportunities take
shape, we are now in a position to formalise discussions with
potential investors."
Einar will lead efforts, on MFDevCo's behalf, to raise finance
into the SPV which will be used to fund the acquisition and
development of gas to wire projects. In addition, Einar is seeking
financing for MFDevCo to support the business as it concludes the
terms of the SPV with Marnavi and, in parallel, seeks to agree
Heads of Terms for the two priority GTW opportunities where efforts
are being concentrated and discussions with operators are moving
quickly. As a result of the progress being made with respect to our
GTW initiative and the SPV, his discussions have, to date, resulted
in indicative offers of up to GBP500,000 for immediate funding,
subject to the conclusion of the SPV. It is critical that work to
establish the SPV and identify financing sources keeps pace with
those discussions to ensure that their successful conclusion.
Enquiries
Nu-Oil and Gas plc
Simon Bygrave Tel: +44 (0)161 817 7460
Investor Relations & Communications
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Rory Murphy/Ritchie Balmer/Jack
Botros
Novum Securities Limited Tel: +44 (0) 20 7399 9425
Jon Belliss
Notes
Marginal Field Delivery Company
Marginal Field Delivery Company ("MFDevCo"), a limited liability
company, focuses on maximising recovery from the vast, undeveloped
hydrocarbon resources contained within marginal fields worldwide,
utilising appropriate re-deployable solutions to transform these
undervalued assets. MFDevCo seeks to manage the entire lifecycle of
marginal field projects from opportunity screening, suitability
assessment and financing through engineering to production and
decommissioning.
www.mfdevco.com
Marnavi Offshore
Marnavi Offshore are the operators of a recently constructed
fleet of offshore vessels incorporating AHTSs, MPSVs, European
built with the latest DP2 Station Keeping capabilities, AHC Cranes
(where applicable) and fully SPS compliant meeting the latest
industry standards for offshore vessels.
www.marnavi.it
Next Geosolutions
Next Geosolutions is an international turn-key geoscience and
engineering service provider operating in the energy,
infrastructure and utilities markets.
www.nextgeosolutions.com
Disclaimer
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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