The Navits Petroleum Partnership reports this morning that it has transferred about $ 60 million to complete its share of the capital required to develop the Shenandoah Reservoir, in accordance with the financing agreements and commercial agreements signed prior to the FID’s final investment decision.
The transfer of the full amount, together with the increase in the project debt, enables the preservation of Navits’ status as the leading partner in the project, with a 49% holding. At the same time, the other partners in the project also transferred their share to finance the overall development of the project, which stands at about $ 1.8 billion. Transferring the full amounts required in the vicinity of the final investment decision, allow financial stability for the development of the project.
The partners in the Shenandoah project are Navits Petroleum, through its subsidiary ShenHai (49%), companies from the Blackstone Fund (31%) and alongside them and the investment fund Quantum Energy Partners (20%).
Navits placed its share of the cost of developing the reservoir after signing development financing agreements with a consortium of foreign banks and Israeli banks and institutional entities, led by Societe Generale Bank, and having successfully completed a series of capital and debt raising in recent months.
Accordingly, Navits’ share of the senior debt for the project amounts to approximately $ 544 million, and the amount of equity provided by Navits for the project is approximately $ 371 million.
Development of the Shenandoah Reservoir began in August this year, following a final FID investment decision of the partnership in the reservoir. The development of the project is expected to be completed by the end of 2024, when in the full first production year it is expected to produce about 80,000 barrels per day, from four production wells.
The reservoir contains about 388 million barrels of oil and gas (BOE) and Navits’ share stands at 190 million barrels. The cost of the break-even in the project is $ 16 per barrel and the marginal production cost per barrel is about $ 8.
The discounted cash flow for Navits’ share is about $ 1.61 billion, based on an oil price of $ 61 derived from average analyst forecasts. In a $ 75 barrel price scenario, the expected discounted cash flow to Navits from the Naduada project jumps to $ 2.19 billion. The price of a barrel of oil in the commodity market today is about $ 75.
Navits Chairman Gideon Tadmor: “The Shenandoah Reservoir, in which huge sums were invested, was purchased by Navits at minimal cost while taking advantage of a unique opportunity and set out to develop under optimal conditions. “Evidence of the capital market’s trust in Navits and the great potential of the Shenandoah project.”