re: Ann: Rialto completes transaction with Vi... This is my...

re: Ann: Rialto completes transaction with Vi... This is my understanding of it, and there will be a bit of complication around this as it stills states about Petroci's back in rights, which we know from Rob that they can essentially pay for this through production also.

This is my table of my understanding of the split of the block.

Originally EEA New EEA Until Petroci $10m
RIA 85% 74% 25% 29%
Vitol 46% 53%
Petroci 15% 26% 29% 18%

I could see Vitol taking maybe 80% of revenues until they have their $50m back so therefore our interest will drop equally with Petroci's other than the fact Petroci have to pay their $10m, out of cashflow also.

One other complication 9and I don't know the answer, is Petroci's original 15% (which I think is now 18% of the EEA and 13% of the rest of the block) is free carried. Thats fairly obvious that thats related to capex, BUT I have seen other blocks where Petroci don't receive a cent until the other paying partners have recovered their investment. I'm not sure if thats the case here, and it would be good to have this clarified, as this will make a difference in terms of the investment case.

You are right on the interest, however it depends how they structure the loan. They could have a normal loan that entails repayment of the interest and principal, of payments could be deferred. Most I have seen in low value oil companies, when they are RBL facilities they manage to at lest defer the principal payments and also sometimes the interest. If they could negotiate that then whilst this may incur an additional 1% or so on the base rate it may work out better as they can defer any instances where they have to raise additional capital.

I am assuming FID by the end of the year, and I think they should be able to get there with financing sorted (RIA will need an RBL, Vitol will just use cash) and gas sales agreement in place. It would make sense for the CIV govt to fasttrack the GSA as they want this developed asap.