Canada’s Velvet Energy Ltd. completed a private placement of US$125 million of senior secured second-lien notes due 2023.

On Oct. 5, the company placed US$125 million of notes with funds advised by FS Investments and sub-advised by GSO Capital Partners LP, and certain investment funds managed by CI Investments Inc.

Velvet Energy will temporarily pay down existing bank debts and fund an expanded Edson Ellerslie development program.

The company will draw CA$30 million on the equity line led by its private-equity investors. This will support early-stage exploration activities. The company added that the financing will not change the terms of the CA$165 million syndicated credit facility.

RBC Capital Markets was the placement agent for the notes.

Velvet Energy also provided an update on its core Edson Ellerslie program and plans for advancing key exploration initiatives.

Velvet controls more than 425 net sections of land in the Edson fairway, and has identified more than 600 net drilling locations in the Ellerslie and Deep Basin stack, providing over 10 years of low-risk, low-cost, high rate of return growth.

Proceeds from the private-equity line will support capture opportunities and play de-risking for early-stage projects. Some of the proceeds will support work in the Montney oil window at Gold Creek.

Velvet Energy Ltd. is based in Calgary, Alberta.