FCMB DEMONSTRATE LEADING ROLE IN NIGERIAN OIL AND GAS FINANCE – 27 FEBRUARY 2008
Lagos, Monday 27th February 2008; First City Monument Bank is leading a new wave of investment in the oil and gas sector in Nigeria as local investment and local content in the sector increases.
The consolidation of Nigeria’s banking sector and the resulting explosion in bank’s balance sheets has dramatically increased the capability of Nigerian banks to finance oil and gas deals. Increased capital has meant that FCMB can now play a key role in financing for new deals and use innovative international structuring to do so.
FCMB recently concluded a US$62 Million debt and international warrants based financing package for Afren, the AIM listed Africa focused independent oil and gas exploration and production company. Speaking about the deal FCMB MD/CEO Ladi Balogun said: “This is a landmark for oil and gas finance in Nigeria. We have successfully provided Afren with a facility to re-finance a senior convertible note using a hybrid of senior subordinated debt and warrants. With a capital base of over US$1 Billion and a successful local and international public offer behind us we are poised to expand our involvement in the oil and gas sector and demonstrate that a local bank has both the expertise and financial resources to play a key role.”
With proven oil reserves of 40 Billion barrels, average daily production of 3.2 million barrels and a gas industry projected to match oil revenues as facilities come on-stream Nigeria has the potential to grow its production levels significantly. Already estimates suggest that the financing of the oil and gas industry in Nigeria is worth over US$20 Billion annually and Nigerian banks are taking a larger percentage of this as they diversify into upstream deals and balance their energy portfolios.
FCMB’s has an 8% oil and gas market share and has ambitions to increase this to 12% in 2008 and between 15% and 20% in three years. FCMB has put together a team of local and international experts to drive forward this growth. The bank has a clear policy of recruiting the best international talent and blending that with the local experience it has built up over many years of operations.
Peter Obaseki, Head of Corporate Banking at FCMB said “We are deploying significant resources in terms of human capital and capital funds into the energy sector. We are already seeing success, before now Nigerian banks were generally restricted to involvement in the downstream sector of the energy industry, but we now have the capital and the skill to become involved in upstream deals. The Afren deal was a perfect example of that.”
FCMB is already involved in the next wave of deals in the sector and recently provided partial guarantees for Oando’s US$625.7 Million acquisition of Royal Dutch Shell PLC’s 49.8% stake in the OML 125 and OML 134 oil blocs.