San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, has announced a conditional investment of US$2mn as well as an option to conditionally invest a further US$6.5mn in the equity of Energy Link Infrastructure (Malta) Limited (ELI)
ELI owns the Alternative Crude Oil Evacuation System (ACOES) project.
The equity being conditionally purchased and the equity that may be purchased via the option are existing equity interests in ELI owned by Walstrand (Malta) Limited, ELI's largest shareholder.
As previously announced, the ACOES is being constructed to provide a dedicated oil export route from OML 18, comprising a new pipeline from OML 18 and a floating storage and offloading vessel (FSO). Once commissioned, which is expected to be during the second half of 2021, the system is expected by Eroton to reduce the downtime and allocated pipeline losses currently associated with the Nembe Creek Trunk Line (NCTL) to below 10%.
The conditional investment will comprise of the company investing US$2mn for 1.323% of ELI, with San Leon simultaneously receiving an option to conditionally purchase a further 4.302% of ELI for US$6.5mn (together the ‘Further Investment’).
The total consideration payable should the Option be exercised in full will therefore be US$8.5mn and will be payable by the company in cash. Any investment pursuant to the Further Investment will be conditional on obtaining the consent of Guaranty Trust Bank PLC (GTBank) who currently hold a pledge over the shares held by Walstrand (Malta) Limited in ELI. The exercise of the Option will be at the sole discretion of the Company, although such exercise will be subject to the consent of GTBank.
