PetroLatina Energy Plc
(PetroLatina or the Company)

New Senior Secured Debt Facility of up to US$100 million to replace existing facility

PetroLatina (AIM: PELE), the independent oil and gas exploration, development and production company focused on Latin America, announces that it has entered into a senior secured credit agreement with BNP Paribas (BNP) to repay and replace its existing facility with Macquarie Bank Limited (MBL).

In accordance with the terms of the credit agreement, executed yesterday, BNP has arranged a revolving senior secured loan facility of up to US$100 million to the Company in order to repay the existing MBL facility and assist with financing the accelerated development and enhancement of the Company’s highly promising oil and gas assets in Colombia.

The initial borrowing base has been set at US$36 million, which was made available and drawndown on completion of the credit facility documentation on Friday 9 December 2011. Of this US$36 million, approximately US$29.425 million has been utilised to repay the Company’s existing senior secured facility and close out all of the related oil price hedging contracts with MBL.

Highlights:

BNP has entered into an agreement to provide a four year revolving Senior First Lien Secured Credit Facility of up to US$100 million (the “Senior Facility”) to the Company and its subsidiaries, in order, inter alia, to repay the existing facility with MBL and finance part of the Company’s planned ongoing drilling programme.

The Senior Facility provides:
Up to US$100 million of funding, with availability for drawdown determined relative to a borrowing base calculated by reference to the Company’s proved reserves. The Senior Facility is designed such that the borrowing base should increase over time in line with the Company’s future potential increase in reported reserves, subject to and in accordance with the terms of the credit agreement; and
The initial borrowing base has been set at US$36 million which was made available by BNP on closing on Friday 9 December 2011 to, inter alia, part-fund the Company’s current exploration and development operations in Colombia and to fully repay the existing senior secured facility and close out oil price hedging contracts with MBL.
The Senior Facility has a lower borrowing cost of 3 month US dollar LIBOR plus 4.5% per annum, as opposed to a minimum of 3 month US dollar LIBOR plus 7.5% under the existing MBL facility.
BNP acted as Sole Lead Arranger and Sole Bookrunner, in connection with the Senior Facility, and served as the Administration Agent (“Administration Agent”) and Global Coordinator under the Senior Facility.


Luc Gerard, Executive Chairman of PetroLatina, commented:

This new Senior Facility, comprising a reserve based lending loan, provides us with increased and more cost effective financial and operational flexibility to enable PetroLatina to take advantage of the current rapid growth in the Latin American energy market at a time of considerable global macroeconoic uncertainty and volatility. The Company endeavours to maintain an appropriate mix of debt and equity to finance its growth aspirations and the Senior Facility with BNP is consistent with, and an important part of, this strategy, serving to enhance our liquidity as we continue to execute our long-term exploration and development programme for our extensive asset base in Colombia.

We continue to believe that Latin America, and in particular Colombia, offers attractive consolidation, corporate and new license acquisition opportunities.


Juan Carlos Rodriguez, Chief Executive Officer of PetroLatina, commented:

Our corporate plan continues to be to convert our Probable and Possible Reserves into Proved Reserves and considerably increase production and cash flow through the ongoing drill programme. Ryder Scott’s reserves assessment announced in late April 2011 also reviewed the Company’s exploration prospects and concluded that our estimate that these could contain approximately 22.8 million barrels of gross recoverable oil (8.72 million barrels net to the Company) on an unrisked basis was reasonable. These Prospective Resources principally relate to resources potentially recoverable from: (a) additional development drilling in the Santa Lucia field where considerable resources appear to exist in the Lisama formation; (b) the Juglar, Colon deep and shallow prospects located on the La Paloma block; and (c) the Putumayo-4 block.

This new facility, together with the full proceeds (US$15 million) now received from our farm-out of the VMM-28 exploration block to Shell Exploration and Production Colombia GmbH, as previously announced on 4 November 2011 and 15 July 2011, provides us with an enhanced ability to vigorously pursue our planned ongoing and future exploration and development programmes.

Key terms of the Senior Facility

The principal terms of the Senior Facility are as follows:

The Senior Facility is a committed facility of up to US$100 million governed by an initial borrowing base amount of US$36 million. The initial drawdown of US$36 million provides the Company with additional capital to deploy on its ongoing exploration and development work programme as well as enabling the Company to fully repay MBL its pre-existing senior secured facility and the closing out of the related oil price hedging contracts;

The Company’s total borrowing capacity or base under the Senior Facility will be subject to periodic review and adjustment, principally to fund additional exploration and development activities, with the total funds available for drawdown at any given time subject to a number of factors, including BNP’s approval of the Company’s reported reserves levels;

The Senior Facility may be partially or fully prepaid at the end of any LIBOR period on three business days’ prior notice without penalty to the Company (save for any break funding costs);

The Senior Facility has a four-year term to 9 December 2015 (the Final Maturity Date), with repayment on a quarterly linear amortisation basis of the then outstanding principal balance commencing twenty-four months prior to the Final Maturity Date;

The Senior Facility is secured over all of the Company’s exploration and production assets in Colombia (save for the Rio Zulia-Ayacucho pipeline and its revenues which are pledged to an existing third party debt provider);

Interest is payable on amounts drawndown by the Company at a rate of 1, 2 or 3 month US dollar LIBOR plus 4.5% on the last day of the interest period elected by the Company for such loan. The current 3 month US dollar LIBOR rate is approximately 0.54%;

The documentation governing the Senior Facility contains usual and customary affirmative financial, operational and corporate covenants for a credit facility of this nature, including but not limited to, the Company’s continuation of business and existence; compliance with relevant laws; maintenance of appropriate insurance; delivery of financial statements, reports, accountants’ letters, projections, officers’ certificates and other information requested by the Administration Agent or the lenders; maintenance of financial ratios within certain defined ranges; use of proceeds; and compliance with environmental laws and preparation of environmental reports. Further provisions cover notices of defaults; litigation, maintenance of books and records and the right of the Administration Agent or lenders to inspect the Company’s property and records;

The documentation governing the Senior Facility also contains usual and customary representations and warranties for facilities of this type, negative covenants and appropriate additional covenants in the context of the proposed use of funds, including but not limited to: indebtedness; liens; investments; mergers; consolidations; material sales of assets and acquisitions; change of control; dividends; distributions and other restricted payments; and

PetroLatina has agreed to pay the Administration Agent, for the benefit of the lenders, an arrangement fee of 1.75% on the amount drawndown at closing, and a commitment fee of 2% on the unused portion of the commitments (of which there are none). The Company has agreed to pay the Global Coordinator, a co-ordination fee of 0.5%, of the aggregate amount committed for drawdown under the Senior Facility from time to time.


Enquiries:

PetroLatina Energy Plc
Juan Carlos Rodriguez, Chief Executive Officer
Tel: +57 1627 8435
Pawan Sharma, Executive Vice President - Corporate Affairs & CFO Tel: +44 (0)20 7766 0081

Strand Hanson Limited
Simon Raggett / Matthew Chandle Tel: +44 (0)20 7409 3494

FTI Consulting
Ben Brewerton / Chris Welsh Tel: +44 (0)20 7831 3113