FINANCING ENERGY
PROJECTS DURING
THE PROJECT
LIFECYCLE
By Lydia Bugden,
Colm St. Roch Seviour
and Tauna Staniland
E
nergy projects ��� be it conventional
power, renewable energy, oil and gas or
mining projects ��� are generally capital
intensive and, as a result, financing project development is critical to success.
Oil and gas, and mining projects share a similar
trajectory and there are many factors which influence the type of financing available to such projects throughout the project lifecycle. These factors
include: the stage of the project (whether it is at
an exploration phase in which resources are indentified and delineated, a development stage, or an
operating phase); the technical risks involved in the
project (including geological, process, design and
6 SPRING 2013 DOING BUSINESS IN ATLANTIC CANADA
engineering risks); the jurisdiction in which the resource is located (including the legal regime which
governs the project); market conditions and commodity specific conditions; and the financial condition of the entity seeking financing.
Early stage exploration entities are often the
riskiest to finance or invest in. As a result, entities
that hold primarily early exploration properties
are often dependent on common equity as a source
of financing as banks and other lenders are unwilling to engage in this space. Initially, depending
upon the cost of entry into exploration, these entities finance themselves privately, often through
investments from founders, high net worth indi-
