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Hogan Lovells Advises JX Nippon Oil & Gas Exploration Corporation on a Preferred Stock Equity Financing Arrangement with Japan Bank for International Cooperation

19 December 2014

HOUSTON, TX and TOKYO, JAPAN, 19 December 2014 – Hogan Lovells is pleased to announce that a cross-border, cross-practice team made up of lawyers from Houston, New York, Washington, D.C., and Tokyo, advised JX Nippon Oil & Gas Exploration Corporation (JX Nippon) and its subsidiary JX Nippon Oil Exploration Limited (JX EOR), together with JX Nippon (JX), in its preferred stock equity financing arrangement with Japan Bank for International Cooperation (JBIC). The transaction reflects JX's ongoing commitment to the construction and operation of the Petra Nova Carbon Capture Project (the Project).

In July 2014, JX Nippon announced that it had formed, through JX EOR, a 50/50 joint venture with NRG Energy, Inc. (NRG) through an NRG wholly owned subsidiary, in connection with the Project.

The Project involves the construction of a commercial-scale, carbon capture system, which will capture approximately 90% of the carbon dioxide (CO2) in the processed flue gas from an existing unit at the WA Parish power plant in Texas.

The captured CO2 will then be compressed and piped through a pipeline to the West Ranch oil field (in which JX Nippon and NRG each hold a 25% ownership interest), where it will be used in the oil recovery process to boost current production at the field from around 500 barrels per day to approximately 15,000 barrels per day.

Once completed, the Project is expected to be the world's largest post-combustion carbon capture facility that is attached to an existing coal power plant.

As part of the equity financing arrangements between JX and JBIC, in exchange for its receipt of preferred shares in JX EOR, JBIC will provide a significant capital injection to JX EOR (approximately 30% of the total capital) and will continue to assist JX EOR in jointly promoting the Project.

Houston Energy partner David Locascio and Energy associate Luke Edney led the Hogan Lovells JX EOR equity financing team and were assisted by Tokyo Energy senior associate Craig Brook.

For more information on the financing, please visit http://www.nex.jx-group.co.jp/english/newsrelease/2014/20141127_01.html and https://www.jbic.go.jp/en/information/press/press-2014/1127-32872.

Denver Environmental partner Jennifer Biever, Houston Energy partner David Locascio, Washington, D.C. Energy partner Mary Anne Sullivan, and Energy associate Luke Edney led the Hogan Lovells Project team. The Hogan Lovells team assisted JX on all aspects of the Project, including negotiating all key transactional, construction, and project finance documents, conducting all contractual, environmental, and regulatory due diligence and analysis, interacting with the DOE, and complying with CFIUS.

For more information on the project please visit: http://www.hd.jx-group.co.jp/english/newsrelease/upload_pdf/20140715_02_01_1050061.pdf.

 
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