VAALCO Energy, Inc. (NYSE: EGY) confirmed that it has inked a new credit agreement for a new five-year Reserve Based Lending (RBL) facility with Glencore Energy UK Ltd. (Glencore) that comprises an initial promise of $50 million and is extended to $100 million. The agreement is effective from May 16, 2022.
VAALCO disclosed that it has seized the opportunity to expand its financial flexibility at an opportune time, with continued higher pricing, strong cash flow generation, and no immediate need to utilize the additional facility. The company believes that it can secure a low-cost financing option by bargaining the facility during a period of strength in comparison to our peer group.
Furthermore, VAALCO stated that this new credit facility provides dry powder for future opportunities while also potentially lowering its overall cost of capital by allowing it to access money quickly and at a low rate if needed. It broadens its potential set and enables it to stay focused on its objective of achieving significant size and scale to generate future investable growth.
Additionally, the company believed that with the continuous expansion of its interests in offshore Gabon, upside opportunities in Equatorial Guinea, and the opportunity to incorporate investable acquisitions targeted at further enhancing VAALCO and generating shareholder value, it is optimistic about the future of VAALCO.
The new credit deal will provide the company more financial flexibility, allowing it to achieve accretive growth by allowing cash access for future development plans. The new agreement broadens the range of inorganic acquisition financing possibilities. Furthermore, the firm believes that the new arrangement would boost its financial position because the company's capital program until 2022 is completely funded. Glencore will supply crude oil marketing as part of the agreement.