Bond Holder FAQs
Frequently asked questions of Aradel’s Bondholders
Q: How does the instability in the Niger-Delta region affect your production?
A: The general insecurity has led to curtailed production. However, the deployment of our producing refinery is not affected by the instability. Also, we have built significant goodwill in our host communities. We have 17years of unbroken operations due to the excellent relationship with host communities
Q: How certain are you that the projects would be concluded before the expiration of the bonds?
A: We have always been a project executing company. The horsepower in our existing operations today is more than enough to keep us going in terms of operations and cater for our obligations.
Q: Is there any foreign currency exposure?
A: The company earns a large proportion of it's revenue in dollars. We have a hedge that caters for any downtime exposure to foreign currency fluctuations in our operations
Q: What is the optimal cost of sales of the issuer?
A: Our cost of sales increase as sales increase. Also the higher our production, the higher our depletion, depreciation and amortization. Lastly, the exchange rate flunctuations also factors into the cost of sales
Q: Can you be more explicit on the repayment basis of the bond issue?
A: There is a 24months moratorium for principal repayments and principal repayments will be in the last 36 months
Q: Who are the receiving banks?
A: FSDH Merchant Bank
Q: How are the bonds packaged (moratorium or amortized)?
A: Principal would be amortized for the last 3 years after the 2 year moratorium. The interest will be paid semi anually and there is no moratorium on the interest
Q: What is the average cost of production of crude and gas seperately across all fields?
A: The average cost of crude oil is $17 per barrel
Q: When is the company resuming exports?
A: December, 2022
Q: What is the outlook for crude oil demand given changing dynamics and weakening demand across the globe?
A: Oil demand remains very strong in the foreseeable future
Q: What would be the pricing of the offer?
A: The pricing of the offer will be dependent on market conditions
Q: Will there be another round of debt raise going into 2023?
A: There will be additional debt capital raise
Q: Do you have long-term contracts with offtakers for crude
A: Yes. Our crude is sold off in a long-term offtaker agreement with international traders
Q: Do you have a production hedge?
A: We do have a hedge in place for production that covers 1year forward of 50% of our projected crude oil production for 2023
Q: Over the next 5 years, where do you see your revenue mix?
A: This will be shaped by the globally determined price of crude oil and gas which we have no control over. However we have a business plan and infrastructure in place to maximize production
Q: What are your margins on refined product?
A: We have leveraged the integrated nature of our businesses and economies of scale to help us achieve significant margins
Q: Can you explain more about your alternative crude oil evacuation?
A: We have secured all necessary regulatory permits to modify our export pipeline through acquisition of jetties, barges, storage tankers and shuttle vessels taking our crude to the bonny terminal
Q: How will you finance your expansion?
A: We have a dollar financing program going on at the moment
Q: Where are you looking to get financing for your expansion, considering the high cost of dollar?
A: The dollar funds for the purpose of the expansion have already been secured
Q: What is the cost of transporting the products through the alternative evacuation to transporting through the Trans Niger Pipeline (TNP)?
A: The alternative evacuation costs some multiples (premium) of what it would via the TNP. However, when transposed against the fact that there is practically zero loss of molecules, it becomes a superior method to the TNP for which 70% - 80% is lost to theft, etc.
