PetroNeft agrees new $2.9m financing as it looks to boost production

Oil and gas exploration company PetroNeft said it has agreed a new $2.9 million (€2.4 million) convertible loan facility that will give it greater security as the company focuses on development and operations.

The company, which operates in the Tomsk Oblast in the Russian Federation, said it had agreed the financing with a group of 13 lenders. It is due to mature in March 2023, and has an interest rate of 8 per cent above the base rate of the Bank of England.

The loan facility will be partly used to support ongoing operational purposes, supporting key operational priorities including bringing the Cheremshanskoye field in Licence 67 on stream for year-round production, further work on the Ledovoye field, and improving production performance at Licence 61.

"We are pleased with this fundraising which includes participation by new investors and demonstrates the continued support from our larger shareholders as we continue to rebuild value in the business," said chief executive David Sturt. "This two-year facility provides additional financing headroom to the company and allows management to further focus on operations as we continue to improve the performance of our assets and deliver value to our shareholders. Not only does this give greater security, it allows management to further focus on development and operations."

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Under the terms of the financing, lenders have the option to convert up to 75 per cent of the outstanding loan to shares, with the conversion price at 2 pence in the first year and 2.5 pence in the second year.