OFFSHORE ENERGY & NATURAL RESOURCES · 5 November 2018 Energy & Natural Resources GREEN ENERGY One...
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OFFSHORE ENERGY & NATURAL RESOURCES INSIGHTS AND DEAL INTELLIGENCE DECEMBER 2018
Transcript of OFFSHORE ENERGY & NATURAL RESOURCES · 5 November 2018 Energy & Natural Resources GREEN ENERGY One...
OFFSHORE ENERGY & NATURAL RESOURCES INSIGHTS AND DEAL INTELLIGENCE
DECE MBE R 2018
Energy & Natural ResourcesNovember: 20182
Andrew JowettPartner | Corporate
Welcome to our first Energy and Natural Resources update. The energy and natural resource industry is global in scale and wildly diverse, although levels of availability and consumption are major factors whether producing coal or gold or lumber. Natural resources, including oil, mining and gas, is a vital sector for many countries but also one full of challenges brought about by ever-changing market conditions, technology and regulations.
In recent years there has been much discussion of ‘peak oil’ and an increasing emphasis on the impact to the local environment. Shale gas has transformed energy markets, while commodity prices have fluctuated as the world economy stumbled, and then slowly recovered. The amount, nature and timing of investment has needed careful consideration.
Companies in this sector require specialist legal advice and practical solutions. Appleby’s energy and natural resources lawyers are based in our offices in key offshore jurisdictions that are highly supportive of this international and cross-border industry, and work closely with onshore advisers located around the world.
In this brief update, we note three sector issues that are of particular relevance right now, and how the offshore region is contributing to their development.
Energy & Natural ResourcesNovember: 20183
OIL & GAS The oil and gas industry has seen considerable disruption over the last few years, as weak prices, enforced capital discipline, productivity efficiencies and portfolio realignments have all taken their toll. The price of oil has since increased from these market lows, driven in the short term by the Organization of Petroleum Exporting Countries (OPEC) /Non-OPEC compliance with agreed production cuts and the collapse in Venezuelan output. However, it is still subject to major fluctuations. There is also the growing possibility of a future supply crunch with investment in many major projects deferred by energy companies during the downturn.
With market fundamentals steadying, Appleby has witnessed plenty of recent positive activity, advising on acquisitions and new finance transactions. Exploration is on the rise again for the first time in years. Companies are building up their capabilities in software operations, and there is always one eye on the future, leading to entries into new types of energy operations outside of a company’s core specialism. There are also strategic distressed acquisitions in the making in order to acquire contract backlog and assets at a distressed price.
RESTRUCTURINGS
The recent tough times in the industry have resulted in a number of restructurings, with companies keen to right-size their balance sheets and limit debt service costs, thereby enabling them to undercut their competitors for new contracts. In one recent high-profile example, deepwater drilling contractor Ocean Rig successfully restructured its debt, with Appleby acting as Cayman Islands counsel to the Ad Hoc Group of Creditors. This was the largest restructuring deal that Cayman has seen. The restructuring resulted in a net debt reduction of approximately USD 3.25 billion and involved the provision of a new USD 450 million credit facility. This almost certainly wouldn’t have been possible in a US Chapter 11 but went ahead thanks to the flexibility of the Cayman scheme of arrangement.
Further restructurings are to be expected as rigs roll off existing contracts and are faced with a situation where the day-rates achievable will be minimal because of the competition for contracts due to the continuing oversupply of rigs in the market.
APPLEBY ADVISES THE ALLIANCE GROUP
Advised Alliance Group in respect of the acquisition financing, in an amount of USD 1.3bn acquisition loan facility. Also acted as BVI and Bermuda counsel to the Alliance Group on the acquisition itself, as well as the acquisition financing aspects. The acquisition was achieved by a buy-out of all the shares in Stockholm-listed Alliance Oil Company Ltd by means of amalgamation under Bermuda law.
“Market fundamentals are steadying”
APPLEBY ADVISES AD HOC GROUP OF CREDITORS
Acted as Cayman Islands counsel to the Ad Hoc Group of Creditors on the financial restructuring of Ocean Rig UDW Inc. and three of its subsidiaries by way of four inter-connected Cayman Schemes of Arrangement and Chapter 15 recognition. The restructuring resulted in a net debt reduction of approximately USD 3.25 billion and involved the provision of a new USD 450 million credit facility.
APPLEBY ADVISES TOTAL E&P DOLPHIN UPSTREAM
Acted as Bermuda counsel to Total E&P Dolphin Upstream in relation to senior secured bonds due 2021 in respect of a Qatari natural gas project financing. The value of the matter is USD 3.5bn.
APPLEBY ADVISES ENERGY XXI (BERMUDA) LIMITED
Acted as Bermuda counsel to Energy XXI (Bermuda) Limited in its USD 2.2bn merger with EPL Oil & Gas, Inc., a union that creates the only publically traded, pure-play oil and gas exploration company in the shallow water section of the U.S. Gulf of Mexico.
REPRESENTATIVE DEALS
Energy & Natural ResourcesNovember: 20184
MINING While the extraction of oil, gas and, lately, shale deposits have risen and fallen in response to the price of oil, there is a marked increase in activity in an enormous growing industry; electric vehicles. The batteries needed to power this transport revolution require a number of speciality metals, including lithium, copper and cobalt.
Huge potential profits await those that can tap into this burgeoning market. Transparency Market Research estimates that by the end of 2022, the global automotive battery market will be worth more than USD54bn. Companies such as Katanga Mining are at the forefront of this. Katanga operates a major mine complex in the Democratic Republic of Congo producing refined copper and cobalt. The Company has the potential to become Africa’s largest copper producer and the world’s largest cobalt producer. Appleby has acted as BVI, Guernsey and Isle of Man counsel to Katanga in relation to the preparation of USD3bn secured term facilities to fund an expansion by one of its joint ventures to increase copper production.
APPLEBY ADVISES TIZIR LIMITED
Acted as Mauritius legal counsel to TiZir Limited on the issue of 9.5%, USD 300 million senior secured bonds, to be listed on the Oslo Stock Exchange. TiZir Limited is a vertically integrated zircon and titanium business which owns the Grande Côte mineral sands mine in Senegal and the TiZir Titanium and Iron ilmenite upgrading facility in Norway.
APPLEBY ADVISES ONE OF THE WORLD’S LARGEST MINING COMPANIES
Acted as Mauritius legal advisors and carried out high level due diligence on the targeted companies in Mauritius, in connection with one of the world’s largest mining companies’ take-over bid for a company listed on the Australian Stock Exchange, with coal mining operations in Africa.
APPLEBY ADVISES PETER HAMBRO MINING PLC
Advising on a cash box placing for AIM listed company Peter Hambro Mining PLC (“PHM”). The cashbox enabled PHM to raise gross proceeds of GBP 72 million. The net proceeds of the placing of shares was used to reduce PHM’s short term obligations in order to facilitate a move to the Main Market after a merger with Aricom PLC had taken place.
“...by the end of 2022, the global automotive battery market will be worth more than USD54bn.”
APPLEBY ADVISES CANADIAN GOLD MINING COMPANY
Acted as Jersey legal advisors to one of the largest Canadian gold mining companies in relation to its investment in a Jersey incorporated, AIM listed company.
REPRESENTATIVE DEALS
Energy & Natural ResourcesNovember: 20185
GREEN ENERGY One of the striking trends at the moment is the rapid growth of renewable energy. The International Energy Agency’s latest renewables report notes that sharp cost reductions and improved policy support are paving the way, along with a very real need to address air pollution concerns.
APPLEBY ADVISES AZURE POWER ENERGY LTD
Appleby Mauritius has advised Azure Power Energy Ltd (Azure Energy) on the issuance of USD 500 million 5.50% Senior Notes, which are to be listed on the Singapore Exchange Securities Trading Limited. Azure Energy is a special purpose vehicle, which is wholly owned by Azure Power Global Limited (Azure Global), a public company incorporated under the laws of Mauritius.
APPLEBY ADVISES CHINA EVERBRIGHT GREENTECH
Acted as the Cayman Islands legal counsel to China Everbright Greentech, in its listing on the Main Board of the Hong Kong Stock Exchange. China Everbright Greentech raised approximately USD 3 billion in net proceeds. China Everbright Greentech engages in the design, construction, operation, and maintenance of integrated biomass and waste-to-energy projects in China.
“Emerging markets are set to overtake developed nations this year in terms of the amount of renewable wind and solar power they have installed.”
APPLEBY ADVISES N.V. (FMO)
Appleby acted as Bermuda and BVI counsel to Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), the Dutch development bank, in relation to its participation in a syndicated loan of USD 90 million to China Singyes Solar Technologies Holdings Limited, a professional renewable energy solution provider and building contractor.
APPLEBY ADVISES MULTINATIONAL RENEWABLE ENERGY GROUP
Advising a multinational renewable energy group in relation to the acquisition of land for reforestation in South America, Australia and South East Asia, and the issuance of carbon credits.
According to Moody’s, the credit rating agency, emerging markets are set to overtake developed nations this year in terms of the amount of renewable wind and solar power they have installed.
With our connections across the African and Asian regions, Appleby has witnessed this growth first hand. In one example, Appleby Mauritius recently advised Azure Power, which is incorporated under the laws of Mauritius, on its public offering on the New York Stock Exchange. The subsequent raising of USD185m means that the company is now well capitalised to complete projects in the pipeline with cumulative capacity of over 2GW as well as bid for new projects.
Azure Power has been providing low-cost and reliable solar power solutions to customers throughout India since its inception in 2008. In the decade since, India has risen to now become the third-largest renewable electricity market in the world and its renewable capacity is expected to more than double by 2022.
Companies such as Azure have been drawn to Mauritius and the reliability and security it offers to investors through its flexible regulatory framework. By setting up an efficient, low-cost entity in Mauritius through which to conduct business, they have been able to adapt quickly in this rapidly evolving sector.
REPRESENTATIVE DEALS
Energy & Natural ResourcesNovember: 20186
Tammy Richardson-AugustusBERMUDA+1 441 298 [email protected]
Andrew JowettBRITISH VIRGIN ISLANDS+1 284 393 [email protected]
Nicholas DaviesHONG KONG+852 2905 [email protected]
Wendy BenjaminJERSEY+44 (0)1534 818 [email protected]
Malcolm MollerMAURITIUS AND SEYCHELLES+230 203 [email protected]
Faye MoffettISLE OF MAN+44 (0)1624 647 [email protected]
Jeremy BerchemGUERNSEY+44 (0)1481 755 601 [email protected]
Caroline BartonCAYMAN ISLANDS+1 345 814 [email protected]
CONTACT US
Appleby has maintained a long historical association with the energy and natural resources industry and is recognised as one of the leading offshore practices advising in this sector. Our experience with advising on complex, crossborder energy, natural resource and mining transactions, together with our market knowledge and insights, enables us to deliver cost-effective, high quality service.
Appleby’s energy and natural resources lawyers are based in our offices around the world, in key offshore jurisdictions that are significant to the industry – such as Bermuda, BVI, Cayman, Guernsey, Hong Kong, Isle of Man, Jersey, Mauritius and Seychelles – and work closely with onshore advisers located in all relevant jurisdictions.
We advise some of the world’s largest energy companies, governments, regulators and investors, on all aspects of the industry and related infrastructure projects, from oil and gas, mining and natural resources exploration, through the generation and production chain to final delivery and distribution.
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© Appleby Global Group Services Ltd 2018. Published in the Isle of Man. All Rights Reserved.
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