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NOT AN OFFICIAL UNCTAD RECORD
Natural Resources & Related Industries

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 Opportunities in emerging markets
 Emerging countries: a growth relay
 Expansion of oil independents
Key challenges to be faced by Independents
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Advising & financing the independents
 Exploration
 Financing Development & Acquisitions
Natural Resources & Related Industries

I ndependents in the new oil & gas Market
Opportunities in Emerging Countries
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Current production > New reserves discovery
 Traditional assets are mature (North Sea, Gulf of
Mexico …)
 Fierce competition and high production costs
 Decreasing replacement rate of World Reserves
 Arising of local companies in emerging areas
(Africa, Caspian Area, Latin America, Asia) with a strong potential in Africa
EMERGING COUNTRIES: THE GROWTH RELAY
Natural Resources & Related Industries

I ndependents in the new oil & gas Market
Emerging Countries: The Growth Relay
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Promising zones
 Wide range of attractive & still unexploited reserves
 Exploration / Early production phase assets
 Mature fields no longer profitable
 Attractive economic & fiscal environment
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High potential assets
 Favourable price context
 Improvement of oil technologies
Natural Resources & Related Industries

I ndependents in the new oil & gas Market
Expansion of Oil Independants
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New players face various problematics:
 Legal environment
 Buying assets through tenders or direct negotiation
 Buying companies (100% or less) which own assets or licences in emerging countries
 Establishing a JV with local partners
 Managing independance
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 Farming in / Farming out with Independents and/or Big names
Finding relevant partners
Choosing appropriate contractors at an effective cost rate
& time schedule
 Financing exploration, development and acquisitions
Natural Resources & Related Industries

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Independents in the new oil & gas market
 Opportunities in emerging markets
 Emerging countries: a growth relay
 Expansion of oil independents
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A tailormade approach at each step of Independent’s life:
 Exploration
 Financing Development & Acquisitions
Natural Resources & Related Industries

A dvising & Financing the Independents
Benefiting from our expertise
 We can assist implementing Independent’s strategy:
 Technical & legal advising as well as introduction to a large network of reliable professionals in the oil & gas industry
 Raising funds and financing them at each step of exploration, development & acquisitions
Natural Resources & Related Industries

A dvising & Financing the Independants
Project stages
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Exploration phase
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Development phases
 Reserves are identified
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Before First Oil
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After First Oil
 High risk /
High reward
 Development risk  Operational risk

Investors’ role 
Investors / Banks’ role

Banks’ role
IPO
Farm-Out
PRIVATE PLACEMENT
PARTNERSHIP
BRIDGE FINANCING
Natural Resources & Related Industries
RESERVE BASED
LENDING

A dvising & Financing the Independents
What is RBL ?

RBL: a US-Born Financial Product
 Methodology derived from standard transactions
 Valuation of assets Borrowing Base
 Lending backed to physical assets generating cash
(producing field)
 Benefits from well-established legal systems
Natural Resources & Related Industries

A dvising & Financing the Independents
Why RBL ? (1/2)
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Traditional Corporate Lending
 Non significant balance sheet and P&L accounts
 Corporate banks uncomfortable with emerging countries
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Pre-Export Financing
 Small production (PDP): facility insufficient to fund asset development
 Financing long term investments with short term credit ?
Natural Resources & Related Industries

A dvising & Financing the Independents
Why RBL ? (2/2)
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Project Finance
 Quality of the Sponsor
 Lack of flexibility
 Development Risk (full asset development)
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New Equity
 Cost
 Dilution of existing shareholders
 Time schedule
Natural Resources & Related Industries

A dvising & Financing the Independents
RBL: A Structured Instrument adapted to Independents
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 Based on asset cash flows, not on corporate CF
 Country risk allowable even with limited asset portfolio
 Tailored to financing needs and company development
 Structured on purpose: Senior debt, Stretch
 Allows risk taking without equity dilution
Natural Resources & Related Industries

A dvising & Financing the Independents
RBL: A Borrowing Base mechanism
 Facility amount determined by a pure cash flow analysis, driven by the value of oil and gas reserves following technical due diligence
 The Borrowing Base is a structure that follows the performance of the company, with an amount evolving jointly with:
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
The development of current assets
The acquisition of new oil and gas interests
 The Borrowing Base can be multi assets and multi countries
Natural Resources & Related Industries

A dvising & Financing the Independents
RBL: Typical Senior structure
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BRIDGE


Facility:
Purpose:
 Tenor:

SENIOR FACILITY


Facility:
Borrowing Base:
 Purpose:



Tenor:
Collateral:
Collection Account :
 Amortization:
Amount fixed on a case by case basis
Exploration and development of the existing reserve base and acquisition
3 to 6 months, until repaid by Senior facility
Fully revolving credit facility
Based on Proven reserves
(North sea : Proven + Probable)
Working capital, exploration and development of the existing reserve base and acquisition
3 to 8 years
Charge on interests in oil & gas properties
Domiciliation of revenues at the agent’s counters
According to cash flow ratios
Natural Resources & Related Industries

A dvising & Financing the Independents
RBL: Typical Junior structure

STRETCH
Identical to senior except :
 Facility:


Purpose:
Amortization:
Up to additional $50 million
(subordinated credit facility)
Development of the existing reserve base and acquisition
According to cash flow ratios
(less restrictive than senior tranche)
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MEZZANINE
Identical to senior except :
 Facility:



Purpose:
Tenor:
Amortization:
Amount fixed on a case by case basis
(subordinated credit facility)
Acquisition
Senior facility Tenor + 1 day
Bullet
Natural Resources & Related Industries

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RBL: T ypical structure
Banks finance up to 2/3 rd of asset value
MEZZ.
STRETCH
+7.5%
+7.5%
SENIOR
ASSET
VALUE
50%
EQUITY
MEZZ.
STRETCH
50%
SENIOR
35%
7.5%
7.5%
Development
Working Capital
Natural Resources & Related Industries
Acquisition

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Natural Resources & Related Industries

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Natexis – Natural Resources & Related Industries
45, rue Saint Dominique
75007 PARIS phone : + 33 (0) 1 58 19 30 19
Fax : + 33 (0) 1 58 19 38 89

Laure PIRONNEAU
Head of Africa & Middle-East e-mail : laure.pironneau@nxbp.fr
phone : + 33 (0) 1 58 19 28 79

Pascal NICODEME
RBL Team e-mail : pascal.nicodeme@nxbp.fr
phone : + 33 (0) 1 58 19 33 41
Natural Resources & Related Industries