Following a strategic review, Tap Oil Ltd. has decided to retain its interest in the company’s flagship Manora Oil Development, along with its current portfolio of assets in Australia and Myanmar.
This decision includes maximizing the value of Manora through near-field exploration and the progression and evaluation of growth and acquisition opportunities in the Southeast Asian region, including Tap’s 95% interest in the M-7 Block in a prospective hydrocarbon region offshore Myanmar. Additionally, the recent award of acreage in the Australian gazettal's, WA-515-P and WA-516-P, has further enhanced the company’s Australian asset portfolio.
Tap has signed an exclusive mandate and indicative terms and conditions with Macquarie Bank Ltd. for a $55 million borrowing base debt facility to refinance its existing $56 million debt with BNP Paribas and Siam Commercial Bank. The refinancing is being driven by the lower oil price that may trigger a requirement to make a further repayment of the BNP facility during 2015 in addition to the $16 million debt repayment requirements already forecast. The impact of such repayments on the company’s free cash flow may result in Tap falling below BNP’s minimum liquidity requirement. A higher interest rate margin will be applicable to the Macquarie facility, and the facility will have a maturity date of Dec. 31, 2018, with no repayments expected in 2015.
The Macquarie refinancing is subject to credit approval and documentation, which is expected to take two months to complete. The facility is expected to be subject to terms and conditions similar to facilities of this type. This will include a requirement to hedge a percentage of reserves in future years. As the size of the borrowing base would be linked to the Manora reserves and revenues (as well as third-party gas revenues), the maximum amount available under the facility will fluctuate with changes in the oil price.
Managing Director/CEO Troy Hayden commented, “The refinancing with Macquarie provides the company with additional flexibility to work through this low oil price environment and move forward with a renewed focus on growth of our Southeast Asian portfolio underpinned by our producing Manora asset.”