Toronto oil company raises US$100M for exploration in South America

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Toronto-based Frontera Energy has closed a US$100M revolving letter of credit (LC) facility which will finance oil and gas exploration in South America.

Arranged by Itaú Corpbanca Colombia, Citibank, JP Morgan, HSBC and Bank of America Merrill Lynch, the funds will enable exploration and transportation in Colombia and Peru, Global Trade Review (GTR) reported on Monday.

The LCs will be issued by the local branches of the members of the syndicate to Frontera counterparties as required for the operations of business, a Frontera spokesperson told GTR. Examples of this business include drilling commitments and abandonment provisions.

The new facility replaces the firm’s current secured LC facility, which has US$81.9M of utilised capacity and matures on June 22, 2018. The updated package has a maturity date of May 17, 2020.

The facility has an initial term of up to eight months, which will be extended to two years upon satisfaction of certain conditions. “Currently the terms of the LC are similar to the terms of the existing US$250mn exit notes,” the spokesperson explains. “Should those notes get called or refinanced, then the terms of the LC will reflect the terms of new financing.”

Frontera has not made the detailed terms of the exit notes public, GTR said.