LGO Energy secures funding for drilling project

7th Dec 2016 09:24

(ShareCast News) - LGO Energy, AIM listed oil and gas exploration company, has announced that it has secured a new $8.6m convertible security funding agreement to pay back its debt and restart its development drilling program at its Goudron Field.The first drawdown of the $1.8m on the funding agreement, managed by Lind partners, will be used in full settlement of all amounts due to BNP Paribas to take the company out of the covenant default position.The company defaulted in October as it was unable to deploy significant capital to oil field operations in Trinidad throughout this year.The new funding agreement will allow the company to immediately deploy the company's current cash reserves, previously locked up in Trinidad and the net cash generated from existing oil operations at its Goudron Field, towards recommencing its development drilling program.Deloitte has estimated oil in place within the field to be up to 975m barrels of oil with gross proved, probable and possible reserves of 25.6m barrels (mmbbls).The company holds existing regulatory approval for the drilling of 45 new wells and has detailed drilling plans for the first 10 well locations.The first drawdown to be repaid to Lind is anticipated to be monthly in cash over the next two years from free cash flow from the Goudron operations.Chief executive Neil Ritson said: "The combination of an affordable loan, robust and profitable production operations and an active drilling program, will allow LGO to quickly return to underlying growth. The patience of our various stakeholders over the last year is greatly appreciated."Lind Partners Managing Director Phillip Valliere said: "Lind has experience investing in Trinidad oil and gas and recognises the potential of LGO's asset portfolio. We are keen to provide new capital to refinance the BNPP debt and to support LGO as it returns to its strategic growth plan to increase production at the Goudron Field. With stable to slightly increased oil prices, LGO will be in a strong position to unlock the significant value that exists at Goudron, and in Trinidad more generally, and Lind looks forward to working with the LGO team to deliver renewed growth and shareholder value."The share price rose 35.35% to 0.146p at 1336 GMT on Wednesday.