Leor Energy, a relative newcomer to oil and gas exploration and production, made a leap into the bank market with a combination of debt and equity last month. "It's prudent for a company at this stage to fund itself with a mix of financing types as opposed to all equity or all debt," said Mark Cozzi, cfo. The company chose JPMorgan to lead its first, three-year, $150 million revolver and it hit up Merrill Lynch for a $150 million private placement equity deal.
Houston-based Leor entered into a three-year, $30 million senior secured note financing in November 2005 with an unnamed investor, according to Cozzi. The company redeemed the debt in July 2006 to free up collateral and bank debt was the next move. "Senior credit is attractive from a cost of capital standpoint," he said. The new revolver allowed Leor to secure lower interest rates though Cozzi declined to comment on the spread.
Leor will use the revolver to fund the continuation of its drilling and exploration activities in Robertson County, Texas.