The Africa Finance Corporation (AFC) has underwritten USD65 million of a USD100 million senior secured term loan facility for Depthwize Nigeria Limited (Depthwize), for the acquisition and upgrade of swamp rigs. AFC, in conjunction with JP Morgan, is the co-mandated lead arranger for the transaction.
Nigeria’s indigenous oil services industry has been a key focus area for growth following the passage of local content legislation in 2010, with the Federal Government of Nigeria keen to domesticate a significant proportion of the sector’s value chain. Depthwize is a Nigerian company established in 2011 as an indigenous shallow water and swamp barge drilling contractor. Megadrill Services Ltd (Megadrill), the technical partner of Depthwize, is an oil services company with expertise in swamp rig construction and operations based in Louisiana, USA. Depthwize operates the assets of Megadrill in Nigeria. The company currently operates 2 High Temperature, High Pressure (HTHP) swamp rigs. Depthwize’s HTHP rigs are some of the most sophisticated in the world, with special automated features technologically ahead of other, more conventional, rigs. The rigs are designed for drilling efficiency and safety, and will enable the company to drill challenging wells in the Niger Delta.
Depthwize is expanding to meet expected new demand from both International Oil Companies (IOCs) and emerging indigenous Exploration and Production companies. Acquiring rigs with the capacity to drill to a depth of 30,000 ft and with the ratings that enable the company to drill challenging HTHP wells is anticipated to act as a key differentiator, providing Depthwize with access to new swamp drilling opportunities in the Niger Delta. The loan facility will be used to finance capital expenditure related to the acquisition of new and the upgrade of existing HTHP swamp rigs.
AFC, an African led international financial institution, was established in 2007 with an initial capital base of USD1 billion, to be a catalyst for private sector infrastructure investment across Africa. AFC was established to help fill a critical void in providing project structuring expertise and risk capital to address Africa’s infrastructure development needs, and is increasingly being seen as the benchmark institution for private sector-led investment in the core infrastructure sectors of power, natural resources, heavy industry, transport and telecommunications.
Commenting on the loan facility Andrew Alli, President & Chief Executive Officer, AFC said “Financing has been one of the primary challenges faced by indigenous oil service companies in Africa. Given changing industry dynamics, and the anticipated opening up of new acreage for exploration and development, the AFC is pleased to play a catalytic role in positioning strong indigenous companies such as Depthwize, which has the right operational and project management expertise, to take advantage of emerging opportunities in the Niger Delta. Depthwize is well placed to become one of the leading drilling contractors in Nigeria and we are pleased to be playing a part in the realisation of this potential”.
Uche Dimiri, Managing Director of Depthwize commented “We are pleased to partner with AFC in building a world class oil service company through which the currently under-developed reserves of the Niger Delta can be brought into production with potential economic and social benefits for the country at large. Depthwize has acquired state of the art rigs, which we have combined with world class operational and project management expertise to operate in difficult swamp conditions. We are uniquely placed to take advantage of growing demand from both emerging indigenous E&P operators and established IOCs.”
AFC is an African-led international financial institution, established in 2007 whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets. AFC is involved as an investor, developer and financier of various infrastructure projects, and is gaining recognition as the benchmark institution for financing the development of infrastructure projects in Africa.
AFC’s current authorized share capital is USD2.0 billion with shareholders’ funds of USD1.24 billion and a 2013 funding programme of USD700 million. To complement its shareholders funds and enhance its financing capacity, AFC has completed several other bilateral borrowings from other DFIs and international commercial banks including; a landmark US$200 million funding facility from the African Development Bank; a USD60 million facility from the German Development Finance Institution (DEG) and the Netherlands Development Finance Company (FMO); and a EURO 50 million facility from the Society for the Promotion and Participation for Economic Cooperation (PROPARCO) with the participation of European Financing Partners S.A (EFP).
To execute its mandate, AFC has established partnerships regionally, with other institutions such as the African Development Bank, African Export-Import Bank, PTA Bank, Islamic Development Bank, Banque Quest Africaine de Developpement, the Nigerian Sovereign Investment Authority (NSIA); and Internationally with the China Africa Fund, the Infrastructure Development Finance Company of India (IDFC), FMO and the US Government through USAID in the US Presidential “Power Africa Initiative”.