Oil & Gas Exploration Financing

Exploration burns cash before it makes cash. Licenses must be secured, seismic acquired, prospects high-graded, and wells drilled on time with a real budget. We raise the stack for credible operators and asset owners. Equity and farm-outs for risk. Drilling capital for speed. Clear paths to appraisal and, if you hit, a development takeout. We also set up a tax-efficient SPV and holdco structure so money flows cleanly across jurisdictions.

1. How Exploration Financing Works

Upstream capital follows the technical story and the license clock. Sponsors secure acreage under a PSC or concession, run 2D or 3D seismic, rank prospects, and drill one or more commitment wells. Cash comes in at the portfolio or asset SPV and is staged against firm work obligations. Appraisal and development are different animals and attract different pools of money.

• Pre-seismic: Seed equity, technical study budgets, G&G team setup.
• Seismic phase: Larger equity or farm-out carry to fund 2D/3D and interpretation.
• Exploration drilling: Farm-outs with carry, promoted equity, or dedicated drilling funds.
• If discovery: Appraisal capital, then a development financing plan with reserves-based debt once 2P is booked.

2. Instruments We Arrange

• Project or Holdco Equity: For seismic, G&G, well planning, and long-lead items.
• Farm-Outs with Carry: Trade working interest for a promoted share of well costs or a full carry through spud and testing.
• Drilling Capital: Dedicated vehicles that fund one or more exploration wells against a promoted return.
• Convertibles and Warrants: Bridge capital with upside if the bit hits.
• Streaming/Royalty and ORRI: Selective use for appraisal or near-development cash needs.
• Reserves-Based Lending (RBL): Not for pure exploration. Comes in after commercial volumes and 2P reserves are booked.

3. Types of Investors

Different pockets of capital show up at different stages. Matching the stage to the money is the difference between a closed round and a long email chain.

• Energy Private Equity: Exploration and appraisal tickets with board rights and milestone draws.
• Strategic Partners: IOCs and independents acquiring working interest through farm-outs with carry and operatorship support.
• Family Offices and Sovereign Funds: Long-dated capital for frontier or strategic basins.
• Drilling Funds and Specialist Credit: Promote-based programs to fund commitment wells.
• Commodity Traders and Offtakers: Prepayments and offtake linked funding appear post-discovery and into development.
• Banks: RBL and term debt once reserves, offtake, and development plans are in place.

4. What Investors Expect To See

• License terms, PSC or concession documents, work obligations, and timelines.
• Technical pack: seismic surveys, interpretation, prospect inventory, risked volumetrics, and well designs.
• Development concept if successful, including evacuation and capex outlook.
• Budget by phase, funding plan, and use of proceeds with contingencies.
• ESG, HSE, and stakeholder plan with permits and environmental baselines.
• SPV structure, governance, and treasury policy for multi-currency flows.

5. How Financely Helps

We underwrite the story, pressure-test the model, and put the deal in front of investors who actually write checks for exploration risk. That means building a credible capital stack and clearing diligence early so legal closes faster.

• Design of a clean tax-efficient SPV and holdco structure with ring-fencing and carry mechanics.
• Farm-out strategy and term sheets with carry and promote calibrated to your basin and risk.
• Placement of equity, drilling capital, and convertibles with energy PE, strategics, and specialist funds.
• Transition plan to appraisal and development funding, including RBL readiness after 2P booking.
• Data room build, investor Q&A, and closing checklist management.

6. Process & Timeline

• Week 1–2: Data room review, red-flag memo, capital stack plan, target list.
• Week 3–6: Indicative terms, technical sessions, HSE and license diligence, budget refinement.
• Week 7–10: Final terms, docs, CP checklist, and funds flow plan.
• Routine transactions: 45–90 days from mandate to first close, subject to license approvals and docs.

Disclaimer: This page is for information only and does not guarantee funding. All capital raising is subject to underwriting, investor appetite, compliance review, and market conditions. Oil and gas exploration carries geological, operational, price, and regulatory risk. Seek professional legal, tax, and technical advice before committing to any financing.