(Alliance News) - Orcadian Energy PLC on Thursday said it has signed a long-term loan agreement with an industry partner, in order to repay outstanding debts to Shell International Trading & Shipping Co Ltd, part of Shell PLC.

According to the oil and gas development company, the partner - which went unnamed - has agreed to loan just under GBP1.2 million for a period of two years.

The loan will be settled using a completion payment already due under a proposed farm-in arrangement on one of Orcadian's recently offered licences.

Interest will accrue from the point of drawdown, expected by the end of the month, until the loan is fully repaid. The interest rate should be between 6% and 9%.

Orcadian added that, once the loan has been repaid to Shell, it will provide the unnamed partner with a security over its near 19% interest in the Pilot field.

"We are delighted to have finalised this facility agreement with our partner, and we are looking forward to updating the market on our plans to build upon this partnership in the future," said Chief Executive Officer Steve Brown.

Shares in Orcadian Energy were down 3.1% at 9.21 pence each in London on Thursday morning.

By Holly Beveridge, Alliance News reporter

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