San Leon Energy, the Africa-focused oil and gas explorer, has acquired a 10 per cent stake in an oil exporting system in Nigeria.
The London-listed company, led by former stockbroker and telecoms entrepreneur Oisín Fanning, is investing $15 million (€12.7 million) in Energy Link Infrastructure (ELI), the company which is building a new oil exporting infrastructure for Nigeria’s Oil Mining Licence (OML) 18 in Rivers State.
The project comprises a new pipeline from OML 18 and a floating storage and offloading vessel. It is expected to come into operation in the coming quarters. The new system is expected to reduce the downtime and allocated pipeline losses associated with the current system.
The investment comprises a 10 per cent equity interest in ELI together with a $15 million shareholder loan, repayable quarterly following a one-year moratorium from the date of investment.
“We are delighted to make this investment, which is in line with our strategy of investing in assets with near-term cash flow, where the initial investment is considered to be of limited risk and where there is material upside,” Mr Fanning said.
He said the new system is expected to generate regular cash flow once commissioned in the coming quarters, “whilst also providing the significant benefits to downtime and losses reduction for OML 18”.
“The structure of the transaction, which combines an equity investment in the project together with a loan, gives us the opportunity to generate a meaningful return from loan repayments in the coming years as well as looking forward to a longer-term dividend return from our shareholding in ELI,” he added.
