WARSAW, 17-8-2015 — /EuropaWire/ — PGNiG Upstream International AS, a subsidiary of PGNiG SA, executed a USD 400m credit facility agreement with eight banks (Societe Generale, BNP Paribas, ING, HSBC, Citibank, CACIB, SEB and Natixis). The primary use of proceeds from the facility will be early payment of some of PUI’s outstanding debt, including the entire debt contracted to finance acquisition of assets from Total E&P Norge in 2014.
The facility, a seven-year revolving loan with a grace period of 30 months, will be one of the key components of PUI’s financing in the coming years. It will provide PUI with flexibility in planning its exploration and production activities, and will enable the company to freely purchase other production assets on the Norwegian Continental Shelf. The funding will also support the ambitious development plans for the two new oil and gas fields − Gina Krog and Snadd.
The Reserve Based Loan formula of the facility gives PUI substantial financial independence and prevents its operations from weighing down directly on PGNiG’s business in Poland, as the facility will be secured on Norwegian assets. It will generate substantial savings in the Group’s finance costs.
In August 2015, PUI will repay approximately PLN 1.3bn to PGNiG. The amount will include PLN 400m under bridge financing provided to PUI in connection with the acquisition of Total’s assets, as well as early payment of other intra-Group borrowings. From PGNiG’s perspective, such early payment will significantly shorten the payback period of its Norwegian venture. It is estimated that by 2017 the aggregate transfer of funds from Norway to Poland will exceed the nominal value of the investment in the Norwegian company.
At present, PGNiG Upstream International holds 15 licences on the Norwegian Continental Shelf, and conducts exploration activities on eight of them, including as the operator on two licences. The company intends to apply for further licences during the coming licensing rounds.
As at December 2014, the total recoverable reserves attributable to PUI were estimated at 81 million barrels of oil and gas equivalent, i.e. nearly 10% of the PGNiG Group’s total reserves. In H1 2015, PUI produced 4.3 million barrels, which represented 22% of the Group’s total output in the period.