Herbert Smith Freehills has advised a group of 25 lenders on a US$4 billion reserve-based lending (RBL) facility for Lundin Petroleum. The transaction was coordinated by HSBC as documentation bank and BNP Paribas as facility agent, and is sized on the basis of Lundin's assets in Indonesia, Malaysia, the Netherlands, Norway and France.

RBL is a particularly active area of the bank lending market. It is mainly used as a tool for independent oil and gas companies who are in a development phase where production is imminent, or where they are already producing oil and gas and need to fund expansion. It provides a flexible loan facility where the amounts available are determined by projected production of oil and gas from the relevant fields.

In addition to being the largest ever RBL facility this transaction also includes the biggest ever pre-development financing – with a portion of the debt supported by Lundin's interest in the Johan Sverdrup asset in Norway.

Herbert Smith Freehills' involvement in this deal consolidates the firm's leading position in the RBL market: last year we advised Perenco on its US$3 billion RBL facility as well as the lenders with respect to RBL facilities involving Dana Petroleum (US$1.5 billion), EnQuest (US$1.2 billion) and Ithaca (US$900 million). During the course of 2013 we advised the lenders on most of the RBL deals in the North Sea.

The Herbert Smith Freehills team was led by London Finance partner John Balsdon, assisted by senior associate Thomas Bethel, associate Angus Mercer and trainee solicitor Lisa Quelch. Paris Finance partner Louis de Longeaux advised on French law matters assisted by Jihene Choyakh and Romain Guirault.

John Balsdon comments: "This is a landmark deal in the upstream financing space and we are particularly pleased to have continued our run of involvement in most of the big-ticket reserve-based lending transactions in the market over the past two years."

Ashurst advised Lundin.

Herbert Smith Freehills' energy finance team provides market-leading support across the full breadth of commodity-backed financings and supports clients on some of the largest and most complex projects in the market. At present, the team is advising the lender syndicate on the financing of the South Stream pipeline offshore section and is acting on the largest financing to be arranged under the UK Government's Electricity Market Reform payment model.