American Oil and Gas Reporter - April 2018 - 120

SPECIAL REPORT: GULF OF MEXICO
company. "By leveraging that equity, we
can do more projects," he remarks, noting
that LLOG has six deepwater projects
moving toward first production over the
next year. "That is quite a few projects in
what has generally been considered a
downturn in the Gulf, when many exploration and production companies are not
executing any offshore projects."

As LLOG is doing on multiple Gulf projects it is currently developing in addition to Buckskin, the company is relying on subsea tiebacks to produce the oil and gas to an existing
platform, in this case Anadarko's Lucius spar. Rather than building a new standalone
facility, LLOG is leasing capacity on Lucius and timing Buckskin's development to the
mutual benefit of both parties. Shown here are operations to lift one of the TechnipFMC
subsea trees in preparation for its installation on the seafloor.

was anything but typical, according to
Chief Financial Officer and Treasurer
Phillip LeJeune. "We are told that the
way we have raised the funding for this
project was the first of its kind," he states.
At first, LLOG followed the conventional route for financing. The company
received attractive terms from multiple
U.S. and European banks and was considering them, LeJeune said. Then Navitas,
a partner in Buckskin, suggested LLOG
approach the Tel Aviv stock exchange
about issuing a bond.
The bond would be issued by Navitas,
which would do a back-to-back loan to a
LLOG entity and the Navitas entity for
the funding of the asset, LeJeune explains.
In back-to-back loans, two companies
from different countries borrow offsetting
amounts from one another in each other's
currencies. The idea is to hedge against
currency fluctuations, he relates.
"We raised more than $200 million dollars collectively. We felt the cost was quite
attractive, all-in around the 8 percent mark
with a coupon at 7.75 percent," LeJeune
says. "Right now, both issues are trading
above par, so we are feeling pretty good
about what we are seeing in the market."
According to LeJeune, the cost of
capital was slightly better on the bond
market than conventional financing. But

the debt-to-equity ratios were "dramatically
different." Debt-to-equity for the bond
was better than 70/30, where commercial
loan and development financing fell in
the 60/40 range, he offers.
"The bond financing means we can
fully develop the field, bringing the first
two wells on line and additional wells if
and when we wish," LeJeune states.
Fowler adds that LLOG has decided
to go with the bonds option because
equity is "absolutely precious" to the

120 THE AMERICAN OIL & GAS REPORTER

Buckskin is a significant milestone for LLOG Exploration,
given the size of its reserves,
scale of development and location in the ultradeepwater Lower
Tertiary Wilcox, but the company also is eyeing the future by
demonstrating it can apply its
low-cost, high-efficiency deepwater development model in the
frontier trend. Success at Buckskin could open additional opportunities down the road for
LLOG in the Lower Tertiary
Wilcox.

Subsea Solution
As it has more than 20 times to date,
including on the other five Gulf projects
it currently is developing, Buckskin will
rely on subsea tiebacks to produce the
oil and gas to an existing platform. Even
the tieback demonstrates LLOG's dedication to low-cost, efficient solutions,
Zimmermann notes. Instead of building
a dedicated standalone production facility
at a cost of billions of dollars and requiring
years of construction time, LLOG and
its partners are leasing capacity on
Anadarko's Lucius floating facility and
timing Buckskin's development to the
mutual benefit of both parties.
"The result is that Buckskin's total costs
and construction times are a fraction of a
greenfield project," Zimmermann says.
According to Zimmermann, LLOG
has a processing and handling agreement
with Anadarko for 30,000 barrels a day
of firm capacity on Lucius, and LLOG
believes there is a good chance the first
two Buckskin wells will need every bit
of that, and additional wells will be
staged in as the capacity becomes available," he explains.
Fowler adds that Anadarko has been



American Oil and Gas Reporter - April 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2018

Contents
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