PNG’s Oil Search close to finalise $450 mln credit facility
October 21st, 2008 | by admin |SINGAPORE, Oct 21 (Reuters) - Oil Search Ltd (OSH.AX: Quote, Profile, Research, Stock Buzz) ishoping to close a 5-year credit facility deal of $450 millionthis week on attractive terms, signalling that cash-rich oilcompanies can weather the economic storm, a company officialsaid on Tuesday.
The deal, which is a refinancing of a 5-year facility, isbeing finalised, with pricing and facility terms more favourablethan those on the facility it is replacing, Nigel Hartley,executive general manager LNG financing, for the company, told aconference in Singapore.
“I am looking for wood to touch in this volatile market butwe should close the deal this week,” Hartley said, adding itcould be finalised on Thursday.
Oil Search operates all of Papua New Guinea’s producing oiland gas fields, with a current gross production of around 44,000barrels per day.
Combined with a cash position of $550.2 million at the endof the third quarter, this would leave the debt-free companywith a total liquidity of around $1 billion, an attractiveposition for the small oil company at a time it is looking for$1.3 billion in equity to finance its LNG project.
Debt financing has dried up on the heels of the currenteconomic crisis and companies have started to rely more onequity and their own cash flows to finance projects.
Oil Search is a partner in ExxonMobil Corp’s (XOM.N: Quote, Profile, Research, Stock Buzz)proposed 6.3 million tonnes a year LNG project in Papua NewGuinea, which moved to a front-end engineering and design (FEED)phase in May.
The project marks Oil Search’s first foray into thefast-growing LNG sector and is seen as a key development whichwould monetise its vast gas resources in Papua New Guinea.
