Oil and gas exploration company San Leon has received a $187 million (€176 million) investment by Tri Ri Asset Management (TRAM) that will back the exploration company’s investments in its operations in Nigeria.
The investment includes a convertible secured loan of $125 million, a $16 million subscription by TRAM for new ordinary shares in the exploration company, and a potential further investment of $46 million from the grant of 62,500,000 warrants by San Leon to Tram.
Africa-focused San Leon, which is listed on the Alternative Investment Market (AIM) and is led by former stockbroker and telecoms entrepreneur Oisín Fanning, said it is using the proceeds to invest in Energy Link Infrastructure Malta (ELI), a provider of crude oil transport and storage systems within the Niger Delta area of Nigeria, which would make it the largest and majority shareholder in ELI at about 55 per cent.
“It is no secret that the past few months have been difficult for San Leon, as they have been for many businesses, but it is testament to the determination and commitment of our team that we have secured one of the largest fundraisings by an AIM oil and gas company in recent years,” said Mr Fanning.
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“In addition, and in line with our announcements over the past year, we have aligned San Leon with a strategic funding partner who has been able to commit a greater level of support than our previous proposed lender, through an innovative investment arrangement which includes them becoming a major shareholder of our company.
“Importantly, our partnership with TRAM enables us to fulfil our long-held strategy of becoming the majority shareholder in ELI.”
New York-based TRAM said the investment was the “start of a long-term relationship”.
ELI is heavily indebted and needs a capital injection to meet obligations to its main contractor for the pipeline construction. The $37 million loan is viewed as essential to ELI securing customers for its pipeline, which in turn would have been detrimental to the value of San Leon’s investment in the company.
[ San Leon Energy swings into profit as it scales up operationsOpens in new window ]
The Malta-based company owns the alternative crude oil evacuation system (ACOES), comprising a new undersea pipeline that will provide a dedicated oil export route from the OML 18 large oil operations in Nigeria, and the FSO ELI Akaso terminal. The latter has been classed by Bureau Veritas for oil storage services and will now start processing hydrocarbons through its facilities.
Mr Fanning said the commissioning of the FSO Akaso terminal was a “game changer” for the industry in the region.
“We are confident that the FSO and the ACOES pipeline will be a significantly profitable and cash-generative project from which San Leon expects substantial upside,” he said.
