14th Feb 2020 11:13
(Alliance News) - Shares in Mosman Oil & Gas PLC slumped Friday as the company announced a new strategy which has included a fundraise at a significant discount.
Mosman was trading at 0.16 pence per share in London in morning trade, down 37%.
Mosman said it has been considering its corporate strategy given "considerable" success at the Stanley project in Texas. It has now decided to focus on Stanley, and other similar projects in Texas such as Challenger and Champion, meaning the Welch and Arkoma projects are to be sold.
The company ranks Stanley as its most important project given its ability to provide a more rapid return on investment. Near-term work includes working over and re-completing wells, further drilling, and buying up further acreage.
To fund the new plan, Mosman has set up a new funding plan, which involves an equity placing, the sale of Welch and Arkoma and other non-core assets, as well as farm-outs elsewhere.
Mosman will be placing 200 million new shares at a price of 0.15 pence each, raising GBP300,000, with investors also getting a warrant per placing share exercisable at 0.23p within a year.
Further, Executive Chair John Barr and Technical Director John Carroll have agreed to subscribe for 41.7 million shares combined at the placing price, raising Zenith GBP61,875 extra. They will hold 4.5% and 3.8% of Zenith respectively after the subscription.
"The great success at Stanley has enabled us to clearly define our focus as we build our production and development projects," said Barr.
"We are now identifying further opportunities with a more streamlined focus and are implementing a funding plan in order to progress. We are pleased to have reached this stage in our growth plan and look forward to delivering accelerated growth in production in 2020."
On the operational front, Zenith said net production in the six months to December was 13,253 barrels of oil equivalent, 13% higher than the first half of 2019.
"This is the fifth consecutive six monthly period of oil production increases and clearly demonstrates the success of the strategy adopted," said Barr.
"Mosman continues to build on its production base and is encouraged by the growth at Stanley, where the first three wells are producing with the fourth well on schedule to be drilled this month. Production at Stanley in 2020 has commenced in line with the average for the previous six months with a programme of recompletions now underway where required."
By George Collard; [email protected]
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