Monday 17th March 2008
The Oil & Gas team at Bank of Scotland Corporate has completed a brace of deals worth €43M to fund the development of fields in Italy, one of Europe's largest markets.
The €18M facility for Mediterranean Oil & Gas, an AIM-listed Exploration & Production company, is the second in quick succession for the Oil & Gas team, following a recent deal to provide Po Valley Energy with €25M credit facility in the run-up to first commercial gas flows this year from the gas developer’s northern Italy fields.
Italy is rapidly becoming one of Europe's largest energy markets, with forecasts suggesting that the country will account for 12.7% of developed Europe regional oil demand by 2010, while contributing 3.3% to supply. Italy's share of gas consumption is forecast to be 18.5% by 2010, while contributing 4.0% to supply.
Mediterranean Oil & Gas
Based in London, Mediterranean Oil and Gas Plc is an oil exploration and gas production company with a portfolio of assets in countries within the European Union, namely Malta, Tunisia and Italy. The funding facility provided by Bank of Scotland will support the company in its development of existing portfolio including Guendalina and Ombrina Mare Fields.
The Ombrina Mare field will be appraised in H1 2008 followed by a fast track full field development, subject to positive results. Mediterranean is also involved in the highly regarded Monte Grosso Oil prospect in the Southern Apennines which will be drilled between 2008 and H1 2009.
Sergio Morandi, the Company's CEO said:
"In addition to our ongoing revenue from production, the Company now has in excess of €33 million available (post the recently announced JKX Italia acquisition) to fund our current work programme.
The good operating cash flow from our Italian production and strong operational team in Italy enabled us to secure debt finance on attractive commercial terms from a quality institution, the Bank of Scotland, despite the current volatility in debt markets. We believe this ability to appropriately use debt and cash flow to fund our expansion gives us a competitive advantage."
PoValley Energy
Australia’s Po Valley Energy Limited has agreed an initial borrowing base of €5 million with Bank of Scotland available for drawdown to be used to finance the construction program for both the Castello (near Milan) and Sillaro (near Bologna) fields, the first fields scheduled to be brought into production.
The balance of up to €20 million Senior Debt facility will be available from Bank of Scotland once Po Valley receives its formal production concessions and final development approval for the Castello and Sillaro fields. Drawdown will be subject to satisfying the terms of the facility.
Po Valley Energy’s Chief Executive Officer, Mr Michael Masterman, said:
"Bank of Scotland Corporate has a proven track record in advising and lending to the oil and gas sector and has recognised the quality of our gas reservoirs in Italy. We look forward to working with Michael Thorpe and the Bank of Scotland team in bringing Po Valley Energy’s gas reserves to market from its first production fields."
Commenting upon Bank of Scotland Corporate's activity in the Italian energy market, Michael Thorpe, Director Oil & Gas at Bank of Scotland Corporate said:
"These are the first Italian oil & gas deals to have been completed by our team at Bank of Scotland – deals which further establish our credentials as a debt provider of choice in the European energy markets. Our deal with both PVE and Mediterranean are excellent examples of how a UK debt provider can partner with international E&P companies to evolve a significant new energy business in a deregulated market environment such as Italy. This is all the more significant at a time when old world economies are being forced to transition to more competitive and greener energy consumables."
Notes to Editors:
Bank of Scotland Corporate, part of HBOS plc, has a reputation for excellence in the provision of corporate finance, delivering innovative funding solutions across a range of markets. Bank of Scotland Corporate employs around 9,000 employees. Total lending at June 2007 stood at £95.8 billion. With experience across many areas of corporate finance, including Oil & Gas, Integrated Finance, Joint Ventures, Structured Finance, Acquisition Finance, Infrastructure Finance and Housing Finance, Bank of Scotland can draw on an expert pool of professionals with proven track records. The Oil & Gas team is a recognised industry leader in the oil & gas sector world-wide. As the first British bank to establish a specialised oil & gas financing team, Bank of Scotland provides funding debt to equity solutions to both the upstream and downstream oil & gas value chain, with a particular niche in funding small to medium sized independent exploration and production companies.
