In a bid to bolster its operations, Vaalco Energy has secured a $300 million loan backed by oil assets in Gabon, Egypt, and beyond. The financing is expected to drive expansion and enhance production capacity.
In a statement on Wednesday, the energy firm announced a new revolving credit facility with an initial commitment of $190 million.
The facility has the potential to grow to $300 million and is led by The Standard Bank of South Africa Limited, Isle of Man Branch, along with other participating banks and financial partners.
This new arrangement replaces the company’s existing undrawn revolving credit facility, which was provided by Glencore Energy UK Ltd.
It is also subject to customary administrative conditional precedents.
The company established the new facility primarily to supply short-term capital that may occasionally be required to supplement its cash balance and internally generated cash flow as it executes its planned investment programs across its diversified asset base over the next few years.
This deal comes after the company’s farm-in on the offshore Côte d’Ivoire CI-705 block in West Africa on Tuesday.
Vaalco Energy will operate the block alongside Ivory Coast Exploration Oil & Gas SAS and PETROCI, with a 70% working interest and a 100% paying interest through a commercial carry arrangement.
George Maxwell, Vaalco’s Chief Executive Officer, commented on the closing of the deal, stating:
“Closing this new credit facility will supplement our internally generated cash flow and cash balance to assist in funding our robust organic growth projects.”
The facility begins with an initial commitment of $190 million and includes an “accordion” feature that allows for expansion up to $300 million.
This $110 million increase option provides Vaalco with the potential to significantly enhance its financial capacity as needed. Amortization of the facility is scheduled to commence on September 30, 2026, establishing a clear timeline for repayment.
Maxwell stated that:
“With $190 million in initial commitment and the ability to grow to $300 million, this facility enables us to fund any short-term capital funding needs that may occur as we execute the significant growth projects across our assets over the next couple of years.”
Initially, the interest rate is set at 6.5% plus SOFR (Secured Overnight Financing Rate). However, this rate is designed to decrease to 6.0% plus SOFR upon the completion of the Côte d’Ivoire Floating Production Storage and Offloading vessel (FPSO) Dry Dock Refurbishment Project.
The facility includes fees for undrawn amounts, with a 35% margin fee for available funds and a 20% margin fee for unavailable funds.
Furthermore, the borrowing base will be redetermined semi-annually.
