Shoreline won’t issue eurobonds until oil above $60 -Chairman
Nigerian energy company Shoreline has no plans to tap international capital markets until oil prices rise back above $60 per barrel, Chairman Kola Karim said on Friday.
Shoreline had initially planned to issue a dollar-denominated bond following a roadshow in late 2015, Karim told Reuters on the sidelines of an investment conference.
“We were out in the market then to do up to $500 million, but right now the world has changed, it is a different place,” Karim said.
“It is all down to just circumstances – if oil prices move in the right direction, the Niger Delta issue is resolved, we see three to six months of consistent performance then … it is a believable story to investors.”
Global benchmark Brent crude futures were trading around $51 a barrel on Friday. Prices have more than halved since peaks hit in mid-2014.
Since the oil price began to fall, Karim said his company had turned increasingly to pre-finance deals with oil trading houses, which are able to give cash in advance in exchange for repayment with interest and usually preferential access to physical cargoes of oil.
He said they were looking for “a good number” of Shoreline’s financing deals to come from pre-financing, and the company is negotiating new pre-financing arrangements. Trading houses told the Reuters Commodities Summit this month they are actively pursuing lending.
“We’re talking to different parties, who are offering different structures,” Karim said. The oil price, he said, “is forcing everyone to think differently on how to finance these transactions.”
Karim said Shoreline is also expanding into domestic gas, and recently secured the Gasland concession, which will allow them to distribute and sell gas to homes and businesses on the islands in the capital of Lagos.
Shoreline has 2.5 trillion cubic feet of gas in the ground, Karim said, and is aiming to start before the end of the year constructing a pipeline network of more than 100 kilometres that will enable them to monetise those holdings and help improve the region’s sclerotic power supply.
Karim said gas had the potential to be “far bigger than oil,” and that the gas distribution business would shield their profits from price fluctuations on international oil markets.