25th Oct 2016 07:11
LONDON (Alliance News) - 88 Energy Ltd on Tuesday said it has agreed to conduct a placing with two institutional investors based in the US to raise a total of AUD11.0 million, bolstering the balance sheet ahead of the next round of drilling on the Icewine project next year.
The oil and gas firm did not reveal the names of the investors and does not need shareholder approval as the placing lies within 88 Energy's placement capacity under ASX rules, it said.
Maxim Group LLC acted as the agent, being paid a fee equal to 7.0% of the proceeds raised, implying a fee of around AUD770,000, and has also been issued with 22.0 million unlisted options to acquire new shares in the company at an exercise price of AUD0.05 per share within a five year period.
88 Energy shares closed at AUD0.0410 in Australia on Monday. In London, 88 Energy shares were trading down 1.3% on Tuesday morning at 2.42 pence.
88 Energy will issue 275.0 million new shares in the company at a price of AUD0.04 per share under the placing, equal to about 2.5 pence, which would be 2.0% higher than the closing share price of 2.45 pence on Monday.
In addition, a total of 137.5 million unlisted options will be awarded with an exercise price of AUD0.055, or 3.4 pence. Those will be in addition to the options awarded to the placing agent but can also be converted into shares within a five year period.
88 Energy said an additional AUD7.6 million would be raised if all those options are exercised.
Importantly, 88 Energy said it can redeem the options for AUD0.001 per option share after two years - if the volume weighted average price of its shares is above AUD0.12 for 20 consecutive trading days.
"The placement is being conducted within the company's 15% placement capacity under ASX rule 7.1 and results in dilution to shares on issue of 7.1%, with another 4.0% possible if all of the placement options and placement fee options are exercised," said the company.
The proceeds are being used to bolster the balance sheet ahead of drilling a new well on the Icewine project in Alaska, whilst also allowing the business to "pursue complementary growth opportunities" in Alaska, plus working capital.
"It is encouraging to receive this level of support from the US, where project Icewine is domiciled. The company is now in a stronger position to exploit opportunistic growth opportunities in Alaska and has increased flexibility in regards to upcoming operational activity," said Managing Director Dave Wall.
"Progress at the Icewine-2 production test well remains on track for commencement of drilling in the first quarter of 2017, which is now just around the corner. Success at Icewine-2 could unlock over 2.5 billion barrels of oil potential for our shareholders and we are, understandably, looking forward to the upcoming well with great anticipation," he added.
By Joshua Warner; [email protected]; @JoshAlliance
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