Macro Tsimmis

intelligently hedged investment

BPZ Energy (BZP) update #13

Posted by intelledgement on Sun, 24 Aug 08

BPZ Resources (BZP), our Peru-centric energy spec play, tentatively lined up $215 million in revolving credit facility funds this week. $15 million of the funding—announced Monday—is from the International Finance Corporation (IFC) and is expected to close in 30 days. The second tranche of $200 million is from “a major international bank,” according to the press release, and “is subject to the lender obtaining credit committee approval for the facility and completion of due diligence as reasonably required.”

Both loans run through December 2012 at a rate of LIBOR plus 2.75%. BPZ plan to apply the initial $15 million tranche to finance continue drilling activities in northwest Peru as well as to make the initial payment to General Electric to purchase three new LM6000 turbines for the gas-to-power project. They expect to close the turbines procurement contract next month and expect delivery of the turbines by 4Q09 in order to have the power plant operational in first half of 2010. They are also pursuing a second loan of $115 million from the IFC to be used exclusively for the gas-to-power project.

The second tranche of $200 million will be used as needed to fund capital projects.

“Step by step we are moving toward getting the full $215 million of senior debt in place to give the Company additional flexibility to pursue the various projects in our acreage in northwest Peru,” stated CEO Manolo Zuñiga. “This senior debt package gives a positive indication of the strength of our assets…. We are committed to growing the asset base of the Company in the most efficient way possible, and access to this financing, as well as cash flow from Corvina oil sales, should keep the Company from having to access the capital markets to fund our drilling campaign.”

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