07-18-2013, 02:23 AM
This loan facility cannot be used to "Drill baby drill". Here is the note from the IOC 1st Q 2013 MD&A:
"BNP Paribas Working Capital Facility (Midstream - Refinery)
This working capital facility is used to finance purchases of crude feedstock for our refinery. In accordance with
the agreement with BNP, the total facility is split into two components, Facility 1 and Facility 2. In October 2012,
the working capital facility agreement with a maximum availability of $240.0 million was amended so that the
facility was made evergreen and the annual renewal requirement removed. As at March 31, 2013, Facility 1 has
a sublimit of $180.0 million and finances the purchases of crude and hydrocarbon products through the issuance
of documentary letters of credit and standby letters of credit, short term advances, advances on merchandise,
freight loans, and has a sublimit of Euro 18.0 million or the USD equivalent for hedging transactions. Facility 2
allows borrowings of up to $60.0 million and can be used for partly cash-secured short term advances and for
discounting of any monetary receivables acceptable to BNP in order to reduce Facility 1 balances. The facility is
secured by sales contracts, purchase contracts, certain cash accounts associated with the refinery, all crude and
refined products of the refinery and trade receivables.
As of March 31, 2013, $70.8 million remained available for use under the facility. The facility bears interest at
LIBOR plus 3.5% on short term advances. The weighted average interest rate under the working capital facility
was 2.61% for the quarter ended March 31, 2013 (compared with 3.01% for the same period of 2012), after
including the reduction in interest due to the deposit amounts (restricted cash) maintained as security."
Assures continued operation of the expanding refinery, but won't turn any drill bits. The Upstream spending these days is very minimal, so cash worries are also pretty minimal and will be less so when the deal(s) are announced.
"BNP Paribas Working Capital Facility (Midstream - Refinery)
This working capital facility is used to finance purchases of crude feedstock for our refinery. In accordance with
the agreement with BNP, the total facility is split into two components, Facility 1 and Facility 2. In October 2012,
the working capital facility agreement with a maximum availability of $240.0 million was amended so that the
facility was made evergreen and the annual renewal requirement removed. As at March 31, 2013, Facility 1 has
a sublimit of $180.0 million and finances the purchases of crude and hydrocarbon products through the issuance
of documentary letters of credit and standby letters of credit, short term advances, advances on merchandise,
freight loans, and has a sublimit of Euro 18.0 million or the USD equivalent for hedging transactions. Facility 2
allows borrowings of up to $60.0 million and can be used for partly cash-secured short term advances and for
discounting of any monetary receivables acceptable to BNP in order to reduce Facility 1 balances. The facility is
secured by sales contracts, purchase contracts, certain cash accounts associated with the refinery, all crude and
refined products of the refinery and trade receivables.
As of March 31, 2013, $70.8 million remained available for use under the facility. The facility bears interest at
LIBOR plus 3.5% on short term advances. The weighted average interest rate under the working capital facility
was 2.61% for the quarter ended March 31, 2013 (compared with 3.01% for the same period of 2012), after
including the reduction in interest due to the deposit amounts (restricted cash) maintained as security."
Assures continued operation of the expanding refinery, but won't turn any drill bits. The Upstream spending these days is very minimal, so cash worries are also pretty minimal and will be less so when the deal(s) are announced.