29th Mar 2021 09:39
(Alliance News) - Zephyr Energy PLC on Monday said it completed the first part of a GBP10.0 million share placing, which will fund an oil well acquisition and a drilling programme in the US.
The Berkshire-based exploration and production company plans to sell a total of 500.0 million shares for 2.0 pence each, a 2.5% discount to Friday's closing price of 2.05p. The first 200.0 million shares raised GBP4.0 million, while the rest are planned to be sold in April.
Shares were up 7.3% to 2.20 pence in London on Monday, giving a market capitalisation of GBP15.8 million.
Zephyr said it will use the money to buy five oil wells in the Bakken Formation, North Dakota. It agreed to buy the wells for USD4.0 million from an undisclosed seller, then pay a further USD4.2 million to the operator of the wells, Whiting Petroleum Corp. The assets have proved and probable reserves of 449,434 barrels of oil equivalent.
The wells are already drilled and are expected to generate substantial cashflow, Zephyr said.
The rest of the money will fully fund a USD3.5 million drilling programme at the Paradox project in Utah. The well is estimated to hold 694,000 barrels of oil equivalent.
The second part of the share placing, which is due to raise GBP6.0 million, is conditional on shareholders giving directors the authority to issue shares on a non-preemptive basis. The resolution will be put forward at the company's annual general meeting on April 16.
"Zephyr's board has elected to be opportunistic in these exceptional times in order to position the company for significant long-term growth - and that growth now has the potential to be achieved without the need for future external funding while giving the company autonomy and flexibility to deliver the value from its existing asset portfolio," Zephyr Chief Executive Colin Harrington said.
By Ivan Edwards; [email protected]
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